Market Brief, North America

With the week’s biggest data release set to drop in less than half an hour, financial markets are still hitting the snooze button. Treasuries are flat, futures are stable, and the dollar is slightly weaker as traders limit risk. Investors expect the Bureau of Labor Statistics to report an acceleration in core inflation, adding to an already-compelling case for more tightening when the Federal Reserve meets in the first week of November. Minutes taken during the Federal Reserve’s last meeting, released yesterday, delivered no new insight for market participants. Policymakers remained committed to their “higher for longer” mantra, noting that...

Nerves are frayed after the Bank of England’s efforts to simultaneously ease and tighten policy continue to sow confusion in bond and currency markets. After stepping up its intervention efforts on Monday, the central bank offered to buy £5 billion in inflation-linked bonds yesterday morning, but instability returned when Governor Andrew Bailey warned pension funds support would end on Friday, saying “You’ve got three days left. You’ve got to get this done”. A later Financial Times article, referencing interviews conducted prior to Bailey’s comments, added to the mixed messaging by suggesting that officials were considering extending relief beyond Friday –...

Currency traders are treading cautiously ahead of a non-farm payrolls report that is expected to show the US job creation engine beginning to cool, but still running far too hot for the Federal Reserve. With high inflation and ever-rising interest rates weighing on economic activity, markets think roughly 250,000 new positions were created last month, down sharply from the 440,000 average in the first half, even as the unemployment rate holds near a historically-low 3.7 percent. Data released yesterday morning showed initial jobless claims jumping to a seasonally-adjusted 219,000 last week from a revised 190,000 in the prior week –...

Equity futures are weaker and currency market trading volumes are down as investors contemplate higher inflation risks – while bracing for tomorrow’s non-farm payrolls report. Oil prices are stabilizing around higher levels after gaining sharply in the last week. The North American benchmark, West Texas Intermediate, is trading for $87 a barrel while its global equivalent, Brent, is holding near $93 after the OPEC+ group of producing countries agreed to cut output by a larger-than-expected 2 million barrels a day. Because most members are already failing to meet targets, the number of barrels removed is likely to be far smaller,...