Jobless Claims Show Labor Isn't the Fed's Problem Right Now — Market Talk
1105 ET - Initial jobless claims fell below estimates to the lowest reading in at least six weeks, a clear message that the U.S. labor market doesn't need help from the Fed, Chris Osmond of Fifth Third Wealth Advisors says in a note. Claims have taken a meaningful step down from August's levels, the labor market is resilient and layoff activity isn't accelerating, Osmond says. "The Fed does not need to trade off its inflation fight against labor market fragility," he says. This level of claims gives the Fed runway to keep policy restrictive for as long as the inflation fight requires, Osmond says. There aren't any distress signals from the labor market that would force an early pivot from the Fed, he says. ([email protected])1058 ET - After declining from the Fed rate hike and the failure of the Clarity Act, altcoins are bouncing back. Some of the strongest gainers include Hyperliquid, which is up 6% to $82.97, and Zcash, which is rising 6.3% to $1,421. Derisking was seen after this week's news, says Nicolai Sondergaard of Nansen in a note, but that appears to be subsiding. Other altcoins--crypto tokens outside of bitcoin and stablecoins--have rebounds outpacing bitcoin. Ethereum rises 2.6% to $2,472, solana climbs 3.1% to $101.68, and dogecoin is up 1.8% to 8.2 cents. Bitcoin rises 0.8% to $76,741. ([email protected])1053 ET - The Bank of England's announcement on the quantitative tightening program eases some pressure in the gilt market caused by uncertainty around the process, Jefferies economist Modupe Adegbembo says in a note. The U.K. central bank slowed the pace of quantitative tightening to an average of 46 billion pounds per year, down from 70 billion pounds per year at the moment. It also announced a plan to sell gilts directly to the Debt Management Office rather than to investors, which came as a surprise to markets. Ten-year gilt yields are down 7.1 basis points at 5.215%, down from 5.295% before the BOE's announcement, where it also held interest rates at 3.75%, Tradeweb data show. ([email protected])1022 ET - The Bank of England is likely to raise interest rates at its next meeting in November, Paul Dales at Capital Economics says in a note. While the central bank kept rates unchanged today, four policymakers who voted to hold suggested that unless energy prices fall back, they will soon vote for rate hikes too, Dales says. "That said, we still believe the market has gone too far pricing in rates rising to 4.75%," he adds. Most officials see higher rates as a precaution, not a response to hotter domestic inflation. "As long as energy prices don't rise much further, one or two 25 basis-point hikes is more likely," Dales says, adding that he expects the bank to cut interest rates late in 2027 or in 2028. ([email protected])1019 ET - The Bank of England announced a plan to sell gilts maturing between 2035 and 2049 directly to the Debt Management Office, rather than to investors. This could allow the DMO to transform the gilts' maturities to shorter-dated gilts, reducing supply of long-dated gilts, Berenberg's Andrew Wishart says. This could ease pressure on long-dated gilts, he says. The move is similar to what U.S. Treasury Secretary Scott Bessent wanted to achieve by increasing bond buybacks, although the BOE is shrinking its balance sheet faster than the Federal Reserve, so it is "significantly less aggressive in terms of the overall impact on bond supply to the private sector," he says. U.K. 30-year gilt yields fall 12 basis points to 5.736%, Tradeweb data show. ([email protected])1010 ET - No country in the world can deal withthe challenges of artificial intelligence alone, Teresa Ribera, the EU's top antitrust enforcer, says. Speaking at a conference in New York on Thursday, Ribera adds that international cooperation and common rules are important. "We don't want a race to the bottom. We don't want a race without rules or understanding what it is happening," she adds. "That means working through multilateral institutions, bilateral dialogue, building common standards and a global benchmark for trustworthy, human-centric AI," she says. ([email protected])1006 ET - U.S. pending home sales fell 3.5% week-over-week to their lowest level in almost three years, Redfin says. Declining homebuying demand is giving buyers breathing room. It means less competition and more room to negotiate for the house hunters who are still shopping. New listings fell slightly, -0.5%, from a week earlier, but they're still up 1.5% year-over-year, and there are still hundreds of thousands more home sellers than buyers in the market. More homes on the market equals less pressure on buyers to rush into a decision or pay more than they want. Home-sale prices are holding steady. The median home-sale price rose 2% year-over-year. That stability means prices aren't soaring, and that sellers aren't in immediate danger of home values dropping. ([email protected])1007 ET - Emirates NBD raises its year-end Dubai inflation forecast to 5.6% as elevated oil prices persist for longer than previously expected. Inflation accelerates to 5.5% in August from 5.3% in July, with prices rising 0.3% on month, the bank says. Housing remains the largest contributor to inflation, although price growth in the category has moderated, while higher petrol prices and airfares drove the latest acceleration. ([email protected])1002 ET - Abu Dhabi leads major Gulf stocks higher, with its benchmark index rising 0.5%. The Dubai Financial Market General Index gains 0.3% and Qatar's QE Index adds 0.2%. The gains come despite a potentially more challenging interest-rate backdrop after the Federal Reserve raised its benchmark rate by 25 basis points to a 3.75%-4.00% range, the National Bank of Kuwait says. The Fed's projections signal another increase by year-end as inflation remains elevated, while most Gulf central banks followed the move with 25-basis-point increases under their dollar-pegged currency regimes, putting further upward pressure on regional borrowing costs. ([email protected])1001 ET - While Governor Andrew Bailey has suggested the Bank of England could raise interest rates, this would represent an insurance hike rather than concern over widening price pressures, James Smith at ING says in a note. The central bank kept rates on hold today, but signaled that future hikes could be necessary to contain rising inflation. "Still, the reality is that there's no sign that the rise in fuel and household energy bills is spilling into other parts of the inflation basket," Smith says, citing falling inflation for food as well as energy intensive good and services. He notes that policymakers calling for a hike characterized such a move as "risk management." This contrasts with the U.S. and eurozone, where rates are less clearly restrictive, he says.([email protected])1000 ET - The Bank of England will probably keep interest rates unchanged until June 2027 when it could resume cutting rates, Danske Bank's Bjorn Tangaa Sillemann says in a note. "The Bank Rate of 3.75% is already restrictive, and we are more skeptical about the growth outlook for the remainder of 2026," he says. Fears of higher energy prices spreading to core inflation hasn't materialized and there are no signs of spillover effects on food prices. The labor market remains on a cooling trend with job losses accelerating in August. However, if energy prices remain elevated and the economy stays resilient, a rate rise is possible, he says. The BOE voted 6-3 to leave rates at 3.75%, as expected, Thursday. ([email protected])0951 ET - Sterling could weaken if the Bank of England avoids raising interest rates in November following Thursday's decision to hold rates at 3.75%, Monex Europe's Nick Rees says in a note. The evidence supports patience with services inflation unchanged in August, private sector pay growth slowing and the unemployment rate at 4.9% in the three months to July while the BOE's agents lowered food inflation forecasts for year-end, he says. "Markets have also done much of the tightening already, with the 10-year [U.K. government bond yield] now sitting at an uncomfortable 5.2%." With the October budget likely to further squeeze demand, the bar for tightening remains high, he says. Sterling falls 0.1% to $1.3373. The euro rises 0.3% to 0.8588 pounds. ([email protected])