US jobless claims fall to a 4-month low

US initial jobless claims fell to a four-month low in the week ending 21 September, dropping to 218k from an upwardly revised 222k the week prior. While the claims data suggests that there hasn’t been a marked rise in the level of firing, at least as of yet, Conference Board survey data suggests that workers are becoming more worried about the ease with which jobs can be found.

Orders for durable goods in the US remained unchanged on a monthly basis in the provisional August data print, after rising 9.9% m/m in July. While the outturn was significantly higher than expectations for a 2.7% decline, core capital goods orders rose by a modest 0.2% m/m. The core capital goods measure strips out both the volatile transportation and defense orders, and is a proxy for capital investment, suggesting that businesses may be holding off bigger orders until uncertainty around the election is resolved.

Tokyo CPI excluding fresh food, a leading indicator for inflation at the national level, rose by 2.0% y/y in September. That is the slowest pace of growth in the measure since May and was largely driven by a reintroduction of energy subsidies to help households deal with soaring temperatures experienced over the summer. Given the one-off nature of the subsidies, it is unlikely that the weaker print will be of significant concern to the BoJ.

Today’s Economic Data and Events

• 13:00 ECB 1yr-ahead inflation expectations (Aug). Forecast: 2.7% y/y
• 16:30 US personal spending (Aug). Forecast: 0.3%m/m
• 16:30 US personal income (Aug). Forecast: 0.4% m/m
• 16:30 US PCE inflation (Aug). Forecast: 2.3% y/y

Fixed Income

• US treasury yields rose on Thursday. Traders will be looking to the release of the PCE inflation data later today. The 2yr yield gained 7bps to 3.6287%, while the 10yr yield rose by a more modest 1bps to reach 3.7963%.
• Moves in major European bond markets were mixed. The 10yr Bund yield rose 1bps to 2.181% and the UK Gilt yield rose 2bps to 4.008%.

FX

• The dollar spot fell 0.4% on Thursday, driven by Chinese stimulus measures and strong US data. EURUSD rose 0.4% to 1.1177, while GBPUSD gained 0.7% to 1.3415. USDJPY rose by 0.04% to 144.81.
• Commodity currencies were also stronger against the dollar. Both AUDUSD and NZDUSD gained 1% to 0.6896 and 0.6328, respectively. USDCAD fell 0.15% to 1.3465.

Equities

• US equity gained on Thursday, largely driven by technology stocks. Markets were also likely buoyed by GDP data revisions showing that the US economy was stronger than previously thought coming out of the pandemic. The S&P 500 gained 0.4%, and both the Dow Jones and the NASDAQ rose 0.6%.
• Major European equity markets saw significant gains, with reports suggesting that China will use a special sovereign bond sale to inject capital into the country’s banking system. Both the Eurostoxx 50 and the CAC 40 jumped 2.3%, while the DAX rose 1.7%. The FTSE 100 gained by 0.2%.
• Locally, the DFM rose 0.8% and the ADX gained 0.05%.

Commodities

• Oil futures fell further on Thursday, on the back of reports suggesting Saudi Arabia is committed to bringing supply back to the market from December. In addition, rival factions in Libya appear to have agreed to a new governor of the central bank, ending a disagreement that limited oil supply from the country. Brent fell 2.5% to USD 71.6 /b and WTI declined 2.9% to reach 67.67 /b.