- The US core PCE increased by 0.3% in line with economists’ forecasts.
- US jobless claims fell to 216,000, below estimates of 229,000.
- The US economy added only 12,000 jobs in October.
Interest futures rose Friday as the dollar, and Treasury yields eased after downbeat US monthly employment figures. At the same time, investors were cautious ahead of the November 5th presidential election.
Data on Friday revealed that the US economy added only 12,000 jobs in October, missing forecasts of 106,000. Meanwhile, the unemployment rate held steady at 4.1%. The downbeat report increased rate cut expectations, boosting interest futures.
US core inflation, consumer spending (Source: Bureau of Economic Analysis)
Meanwhile, data on Thursday revealed that the US core PCE increased by 0.3%, in line with economists’ forecasts. The Fed uses this report as its best gauge for inflation. Since it met forecasts, there was little change to rate-cut expectations.
Meanwhile, another report showed that jobless claims fell to 216,000, below estimates of 229,000. The decline indicated solid demand for labor last week. However, the employment cost index increased by 0.8%, easing from a previous reading of 0.9%. The mix of data paused the dollar’s recent rally. At the same time, investors mostly remained on the sidelines ahead of the NFP and the US presidential election.
Throughout the week, interest futures have crawled higher but remained subdued with no major catalyst. US economic reports have been mixed, keeping rate cut expectations steady. Other data included job vacancies, consumer confidence, private employment, and GDP. Job vacancies came in lower than expected, showing fewer positions for the unemployed. Meanwhile, private employment rose more than expected as more people got employed in the sector.
On the other hand, consumer confidence jumped, showing a bright outlook for the future. However, the GDP report showed a 2.8% expansion, below the 3.0% forecast. Therefore, traders found it hard to make any significant moves in one direction.
At the same time, the market focus is on next week’s US presidential election. The tension has built over a long time, and now the race to the top is tighter. With no clear bias of who might win, there is uncertainty in the markets, pushing market participants to safe-haven assets like gold and bonds.
The outcome of the election will impact fiscal policy. This, in turn, will either allow the Fed to continue cutting rates or lead to a pause or pivot. Therefore, the outcome might cause some market turmoil as investors adjust to new policy outlooks.
