Markets opened September on a soft note. Equities fell Tuesday as tariff uncertainty lingered after a U.S. appeals court struck down much of the administration’s recent trade levies. Tech and industrials paced losses, though energy and consumer staples eked out gains. Bonds sold off globally, with long-dated yields in the U.S. and Europe surging on fiscal worries. The 30-year Treasury is now pressing toward 5%, extending what has already been the worst decade for government bonds in modern history. Gold, meanwhile, surged to fresh record highs above $3,590 as safe-haven demand intensified, while crude held strong ahead of OPEC+ meetings and U.S. inventory data.

The economic picture wasn’t all negative. The final S&P Global Manufacturing PMI popped back above 50, signaling expansion, while ISM’s gauge improved modestly though remained in contraction territory. Companies flagged tariffs as a driver of higher input costs, but new orders and supplier deliveries showed signs of resilience. With rate-cut hopes intact and nonfarm payrolls looming Friday, positioning remains cautious but not outright bearish.

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The bond market stole the show Tuesday, with long-term yields climbing toward levels not seen in over a decade. Global selling stretched into the U.S. session, steepening the curve and pushing the 30-year Treasury near 5%. Analysts highlight ballooning fiscal deficits, heavy issuance, and fading foreign demand as catalysts for the move. For equity investors, the dynamic is twofold: higher yields pressure multiples, yet banks and insurers could find a tailwind if curve steepening continues. The move also highlights how dependent risk assets remain on rate-cut expectations, with even a modest shift in bond market psychology capable of sparking outsized volatility.

Markets are waking up to a curious mix of momentum and flight-to-safety signals. U.S. stock futures are modestly higher, buoyed by Alphabet’s rally after escaping a breakup in its antitrust case, underscoring how company-specific catalysts can still matter even in a macro-driven tape. It's a quiet lift, but worth noting as investors seek clues amid lingering tariff confusion. On the commodities side, the rally in gold has drawn fresh attention. Central banks and hedge funds alike are loading up as credibility questions swirl around the Fed in the wake of Trump’s pressure campaign. Oil prices are broadly softer, with WTI easing as OPEC+ discussions loom and rate-cut expectations shape demand forecasts.

Beijing is leaning hard into anti-American rhetoric. Xi Jinping’s party conference this week carried an unmistakably sharper anti-U.S. tone, and analysts warn it reflects both geopolitical ambition and domestic weakness. That message will be reinforced visually as Xi stands shoulder-to-shoulder with Putin and Kim Jong Un at China’s military parade, a tableau of tightening alliances. Behind the theatrics lies a more practical contest: Washington is tightening chip export rules, making it harder for TSMC, SK Hynix, and Samsung to operate in China. The semiconductor race is now as much about jurisdiction and enforcement as technology.

Meanwhile, questions are rising over who is winning the AI race. U.S. firms continue to dominate the commercial frontier, but China’s scale in data and state-driven funding gives it staying power. The outcome of this contest will reverberate far beyond markets, shaping military capabilities, supply chains, and the global balance of power. Trump, for his part, has downplayed military risks posed by China, focusing instead on tariffs and trade leverage. The standoff is shifting from rhetoric to material economic consequences, with trade, chips, and security all tightly entwined.

The legal calendar is increasingly shaping policy. A federal appeals court blocked the administration from using the Alien Enemies Act to deport Venezuelans, underscoring judicial pushback against Trump’s expansive interpretation of executive powers. The tariff battle is also heading toward the Supreme Court, with the administration appealing last week’s decision that most of its 2025 levies exceeded statutory authority. Until that ruling is settled, tariff policy sits in limbo, a fact markets are finding hard to ignore.

At the same time, the tech sector got a reprieve. A judge barred Google from exclusive search contracts and ordered data-sharing measures, but stopped short of breaking up the company. Alphabet stock rallied on the news, relieved that the worst-case scenario was avoided. Elsewhere, Trump has renewed attacks on Fed Governor Lisa Cook, alleging fraud and again raising questions about central bank independence. With Powell’s gamble at Jackson Hole fresh in mind, the credibility of the Fed is now as much a political storyline as an economic one.

September lived up to its reputation on day one. Stocks slipped, bonds buckled, and gold soared. The tape feels jumpy, with every headline on tariffs or Fed independence sparking moves across asset classes. But it’s worth remembering: the first half of September tends to be choppy, while the back half has historically carried the heaviest downside. Whether that pattern repeats will depend less on seasonality this year and more on Friday’s jobs report and how firmly the Fed follows through with a September cut.