US President Trump said the economy is performing incredibly well.

Goldman derivatives trader Shawn Tuteja says US equity sentiment reversed in two weeks from fearing the Fed, higher long‑end yields, geopolitics and supply to a 'either outcome is bullish' view on the September FOMC. Market reads a dovish‑leaning hike as stabilising the long end, and no hike as confirmation that strong earnings will broaden gains beyond AI. Client net exposures are at the 67th percentile over the past five years and total exposures at the 89th; SPX single‑day call volume hit a record ~4.0m contracts. Tuteja does not predict a large index decline but warns that when both policy outcomes are pre‑priced as positive, market cushioning against a hawkish surprise or renewed long‑yield upside is reduced, raising complacency risk.

Short-dated U.S. Treasuries rallied after weak July retail sales further eroded market expectations for Fed rate hikes in coming months, pushing the two-year yield briefly below 4.10%, its lowest since June 30. The move was concentrated in the policy-sensitive short end; 10- and 30-year yields ticked slightly higher. BMO Capital Markets U.S. rates strategist Ian Lyngen called the print a troubling update on consumer health and said it strengthens the case for the Fed to pause next month. Short-term rate contracts show traders scaling back bets on a September hike and on more than one hike by mid-2027. The pullback in tightening expectations accelerated over the past week after weak July payrolls on Aug. 7 and was reinforced this week by moderate July CPI and PPI readings.