Waller opened the exit and the market took it. Payrolls at 8:30 decide whether the door stays open.

A one-governor rally rebuilt the cushion; one report can spend it

1. Waller moved the strip“If this continues in the data due over the next two weeks, I would be inclined to support holding the target for the federal funds rate at its current setting.” That line took the September hike from roughly two-in-three to about 50%, the two-year down five basis points, the dollar to its lowest since May, and every index up more than 1%. Ed Yardeni counts the committee at five hawks and six “owls” after Waller joined the latter. Section 09.
2. The map moved with itThe dealer flip dropped 55 points while cash rose 81, the structural put wall stepped up from 7,500 to 7,700 — where today’s expiry magnet also sits — and the call wall moved out to 8,000. Both near-dated books cap at 7,800, eight points above Cannon’s R1 in futures terms. Section 04.
3. Payrolls is a binary with an inverted signConsensus is +53k to +56k after July’s −23k, with a forecast spread of 150,000 from Fifth Third’s −25k to Pantheon’s +125k. 22V Research’s survey says a strong print is now read as risk-off because it frees the Fed to hike; only a third of investors expect a rally on a beat. BofA’s economists say payrolls are “unlikely to be the deciding factor” — Chair Warsh mentioned inflation 61 times at Jackson Hole and labor 30. Section 03.
4. Bonds are not done, say the bond peopleEl-Erian on CNBC this morning: the global sell-off is “likely not over,” and Norway’s $2.3 trillion wealth fund proposing to cut its government-bond weighting is a small size with a large signal about who still buys Treasuries. The 10-year eased to 4.77% Thursday; the 30-year is 5.25%. Section 07.
5. The single-name tape is grading guides againLululemon cut its year and is down a fifth pre-market; Zscaler beat on every line and is lower; Tesla gave back part of its Cybercab rally; Adobe is off 3% on a CEO succession; Samsara is up 14% and Guidewire down 14% on the same kind of quarter. Section 08.

Where everything sits after the best day in a month

Sentiment & flow gauges

The flow read is a hedge-unwind on a rally. The front VIX future fell less than cash VIX, vol-of-vol dropped seven points, and skew rose two — index tails got more expensive relative to at-the-money on an up day, which is what happens when the market rallies on a rate call it does not fully trust. Two things are unusual for a 1% day. The bond-volatility index fell three points to 74.7 while David Keller was warning it was rising against a mid-teens VIX — Waller calmed the bond market first, and stocks followed. And retail was already positioned: AAII flipped bullish in the week the index made its low, CNN’s gauge is still in Fear after its biggest jump of the summer, and the September equity option expiry Scott Rubner sized at $6.2 trillion is now two weeks out with dealers long. That combination — long gamma, a coin-flip Fed, an under-hedged rally — argues for a contained session on anything but a large payroll surprise.

Yesterday’s calls graded

One print, then a three-day weekend with the Fed silent

The flip fell onto the day book’s floor; the ceiling everyone shares is 7,800

Cannon Daily Levels — September 4, 2026 · cannontrading.com

Cannon’s ES daily pivot computes to 7,726.83, thirty points under the overnight print, with R1 at 7,792.42 and S1 at 7,687.17. Today’s zero-day /ES book has both of its peaks on round numbers: the heaviest call strike above the market is 7,800 at roughly 3,300 contracts, eight points above R1, and the heaviest put strike below it is 7,650 at about 4,700 — a floor that moved up ninety points from Thursday’s defense, the opposite of Wednesday-to-Thursday’s retreat, and one that lands within two points of the dealer flip in futures terms. The zero-day book prices the session at roughly ±38 points, 7,724 to 7,800 — floor on the pivot, ceiling on the call peak. Mark Newton of Fundstrat, before the jobs number: “a stall near last Friday’s highs looks more likely than an immediate SPX breakout,” with trends “in short-term consolidation within the larger uptrend from late July” and Thursday the best session since mid-August.

Two structural notes. The near-dated books and the aggregate now disagree on the ceiling — both the zero-day and the September-monthly chain peak at 7,800 while the all-expiry wall reads 8,000 — which is the signature of a rally that ran past where the calls were written: the next 200 points of upside have less overhead than the last 100 had, and also less support. And the big monthly strikes are still two-sided: 7,600 carries about 55,000 contracts each way and 7,700 43,000 puts against 42,000 calls, in-the-money interest that makes them magnets into the 18th rather than simple floors.

Cannon Edge — Daily Futures Snapshot, September 4, 2026 · cannontrading.com

Off the Cannon Edge board: the ES and Nasdaq rows still carry short-term down arrows against long-term up trends even after a 1% day — the trend model wants a second close before it turns — while gold, silver, crude, the euro and bitcoin show up arrows on both horizons, and the 30-year bond stays the only row with down arrows on both. Breadth on the rally was the widest of the week — the Russell led, 57% of issues rose at midday — but the week’s damage is not repaired: Bespoke has industrials down more than 4% over the trailing five sessions with four gainers in 83 names, the sector testing its 200-day average, and the S&P’s ten-day advance-decline line at its most negative since May before Thursday. David Keller’s line applies to that: healthy uptrends are “validated by an expansion in new 52-week highs,” and September has not delivered one yet.

A bond bear counting buyers, a bull counting birds, and a technician counting highs

The bulls got their day; the cautious desks got cheaper hedges

The rate path eased; the term premium did not

The curve — a front-end rally, a long end that barely noticed

The two-year fell five basis points to 4.34% on Waller; the ten-year fell two and the thirty-year two, to 5.25%. That is a bull steepening of three basis points on a day the hike was priced out of September — the long end took a smaller share of the relief than the front, which is the term-premium story continuing underneath the policy story. Timiraos frames the September 16 meeting as one of the least predictable in years, with oil and the Gulf arguing for a hike and softer inflation prints for a hold, and Warsh giving “no indication which way he’s leaning.” BCA’s Felix Vezina-Poirier gives Waller extra weight because he “has often been ahead of the curve in both hiking and cutting cycles” and this was “the last major Fedspeak event before the September meeting blackout.”

Tokyo and the carry — priced, not resolved

The yen’s two-day surge took the dollar to 155.28 overnight before settling near 156.3, after Governor Ueda and board member Takata left the door open to an “outsized” hike; the September 18 move is “nearly fully priced” per Bloomberg, and the unwind of yen-funded positions is the mechanism. Newton’s read is that the daily chart has broken its minor uptrend but the “more meaningful move likely waits for the BOJ meeting itself.” The Treasury-buyer thread runs through here too: Japan is the largest foreign holder, and a BoJ at positive real rates is one more reliable buyer with less reason to be one.

The Gulf — two signals in one night

Iran claimed fresh strikes on US bases in Kuwait and the UAE Thursday, and crude held above $91; then the Journal reported the President is privately weighing declaring the Iran war over and shifting to economic pressure, while the Pentagon extends Gulf deployments into 2027, and crude gave back a dollar. Morgan Stanley’s Martijn Rats, on the firm’s podcast Thursday, moved the house Brent call to $100 “later this year” — the bank’s oil desk now sits above the price its equity strategist called the key risk to stocks. Saudi Arabia raised its official selling prices by less than expected, a supply signal cutting the other way.

The data — a hot services economy with a cold labor market

ISM services printed 55.4, the fastest pace in six months, with the strongest new orders since early 2023 and business activity at a 2022 high; El-Erian flagged prices paid at a four-year peak and employment as the lone weak subcomponent. Atlanta’s GDPNow tracks the third quarter at 4.7%. Against that, July’s trade deficit widened 24% to $88.6 billion on a jump in capital-goods imports, and Challenger counted 52,881 announced job cuts in August, the lowest August since 2022. Four-handle growth, a hot services survey and a stalled labor market is the combination Waller called “some signs of disinflation” and the hawks call an economy that does not need help.

The guide is the stock, again

Lululemon beat on the bottom line — $2.92, helped by a tariff refund and interest — and missed on revenue at $2.42 billion, then cut the full year to $10.35–10.5 billion of revenue from $11–11.15 billion and to $9.48–9.73 of earnings from $10.95–11.15. Interim CEO Meghan Frank named China and North America, core leggings, and “negative commentary” on social media; BTIG’s Janine Stichter told CNBC the “real surprise was China.” The stock is at 96.84 pre-market from 121.77 — a fifth of its value on a guide.

Zscaler is the mirror image and the same lesson: fiscal Q4 revenue of $898 million against $877 million expected, up 25%, EPS $1.19 against $1.09, a fiscal-2027 guide of $3.91–3.94 billion and $4.86–4.90 — and the stock is lower pre-market at 174 after rallying 2.9% into the print. A beat-and-raise sold is the tape saying the raise was owned. Samsara is up 14% and Guidewire down 14% on their reports; DocuSign is up 1.5%. Tesla rallied 5.4% into the Cybercab event — two seats, no wheel or pedals, hailable in Austin through the existing Robotaxi app from next week — and is giving back half of it. Adobe named Anil Chakravarthy chief executive from December 1, with Shantanu Narayen moving to executive chair after eighteen years; the stock is off 3.4% on the succession.

The AI complex traded the other way from Wednesday: Broadcom closed down 2.7% on its guide and is bid pre-market, Snowflake held its 17% gain, Dell added another 4.9%, HPE reversed its morning loss to close up 5%, Oracle rose 5.7%, Microsoft 2.7% and Meta 3%; Ciena, down 10% on supply constraints, was the exception. Nvidia agreed to buy Hugging Face for about $12.9 billion, per the FT, and is up again this morning. Coinbase gained 10% with bitcoin’s 5.6% day. What did not change is the scoring rule — Lululemon and Zscaler prove it holds outside AI — and with hedging concentrated in the index rather than single names, stocks into earnings are still carrying no cushion.

Waller closed the book leaning toward a hold

Christopher Waller, the last governor to speak before the blackout, called inflation “meaningfully above” target but said the recent trend “suggest[s] we are finally seeing some signs of disinflation,” and that if the data over the next two weeks continue that way he would be “inclined to support” holding rates — while stressing “it would not take much evidence of persistent inflation pressures to support a hike.” The burden of proof moved to the inflation data, which is why CPI on the 11th, inside the quiet period, is now the meeting’s deciding print. Waller and Williams together are the two most senior voices since Jackson Hole, and both lean hold; the hawks have the Beige Book, the ISM prices indices and $90 crude. The strip split the difference at 50%. What today’s report can do is shift the burden back: a hot print with firm wages hands the hawks a labor market that does not need protecting, and the “owls” Yardeni counts are, by definition, still watching.