Yields Ease as Claims Hold Near Lows

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Yields Ease as Claims Hold Near Lows

-105,600m Trade Balance3.70 Atlanta Fed GDPNow-2.1m API Weekly Crude Oil7.49 MBA 30-Year Mortgage Rate-3.2m EIA Weekly Crude Oil

S&P 5007,765.36-0.47%

US 10Y Treasury5.22%-6 bp

WTI Crude90.82-0.73%

Gold4,204.90+1.15%

Market Snapshot

Asset	Level	Change
S&P 500	7,765.36	-0.47%
Nasdaq 100	30,725.81	-1.39%
Dow Jones	51,231.64	+0.10%
Russell 2000	2,794.13	+0.03%
USD/JPY	158.31	+0.16%
EUR/USD	1.12	+0.08%
GBP/USD	1.32	+0.08%
Gold	4,204.90	+1.15%
WTI Crude	90.82	-0.73%
Bitcoin	82,438.11	+0.93%
US 2Y Treasury	4.75%	-2 bp
US 10Y Treasury	5.22%	-6 bp

Prior Economic Events

Data	Prior	Cons	Actual
Trade Balance	-92,800m	-102,000m	-105,600m
Speech by Fed's Williams	-	-	-
Speech by Fed's Bowman	-	-	-
Atlanta Fed GDPNow	3.70	3.70	3.70
Speech by Fed's Schmid	-	-	-
API Weekly Crude Oil Stocks	1.0m	-	-2.1m
Speech by Fed's Logan	-	-	-
MBA 30-Year Mortgage Rate	7.30	-	7.49
EIA Weekly Crude Oil Inventory	922,000	1.7m	-3.2m
EIA Weekly Gasoline Inventory	-1.7m	-1.7m	382,000

Today's Economic Events

Data	Prior	Cons	Time
Michigan Consumer Sentiment Prel	48.10	47.60	10:00
Speech by Fed's Collins	-	-	16:00

Jobless claims ticked down to 197,000, underscoring labor-market resilience while the Atlanta Fed trimmed its Q4 GDPNow estimate to 3.6%.
The 10-year yield eased 6 bp to 5.22% and the 2-year slipped 2 bp to 4.75%, with the curve bull-flattening as growth trades cooled.
Equities diverged: Nasdaq 100 fell 1.39% while the Dow gained 0.10%, and gold rallied 1.15% to $4,204.90.

Yesterday's Recap

US equity markets closed mixed on Thursday, with the S&P 500 down 0.47% at 7,765.36 and the Nasdaq 100 lagging at -1.39%, while the Dow Jones bucked the trend, adding 0.10% to 51,231.64 and the Russell 2000 was flat at +0.03%. The labor market remained the focal point: weekly jobless claims printed at 197,000, below both the prior week's 199,000 and the 200,000 consensus, reinforcing the picture of a resilient hiring backdrop. The Atlanta Fed's GDPNow tracker was revised down to 3.6% from 3.7%, a modest trim to fourth-quarter growth expectations that nonetheless leaves the model pointing to well-above-trend expansion.

In energy markets, EIA data showed crude inventories fell 3.19 million barrels against expectations for a 1.7 million barrel build, while gasoline stocks rose 382,000 barrels; the API's earlier estimate had shown a 2.09 million barrel draw. WTI settled at $90.82, down 0.73%, despite the tighter inventory picture. Treasury yields retreated across the curve, with the 10-year easing 6 bp to 5.22% and the 2-year down 2 bp at 4.75%, narrowing the spread by 4 bp.

The dollar was mixed, with EUR/USD up 0.08% at 1.12 and USD/JPY firming 0.16% to 158.31.

The Day Ahead

Friday's calendar is light on Tier-1 releases, leaving markets to consolidate Thursday's moves and position into the weekend. The sole high-impact print is the University of Michigan's preliminary consumer sentiment reading at 10:00 ET, with consensus looking for 47.6 versus the prior 48.1 — a modest dip that would nonetheless keep sentiment near cycle lows and sharpen focus on the inflation-expectations component. Attention will also remain on the mortgage market after the MBA 30-year rate printed at 7.49% on Wednesday, up from 7.30%, a level that continues to pressure housing affordability and refi activity.

With no other major data scheduled, Fed speak takes on added weight: officials have been active this week, and any additional commentary will be parsed for signals on the rate path into year-end. Energy traders will watch for the next round of inventory data and any escalation in the Middle East after oil surged more than 5% midweek on reports of potential new US strikes on Iran. ↓ p.2

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The Day Ahead (continued)

Equity investors will monitor whether the rotation out of megacap tech into cyclicals and value extends, following Thursday's divergence between the Nasdaq and Dow. The bond market's tone after this week's selloff-and-recovery dynamic will also be scrutinized, with the 10-year's retreat to 5.22% offering some relief to rate-sensitive sectors.

Other Economic Notes

The August trade deficit widened to $105.6 billion from $92.8 billion, reflecting the persistent gap in goods flows even as the domestic economy expands at a 2.2% annualized pace. Retail sales growth of 5.36% year-over-year continues to signal robust consumer demand, though the jump in 30-year mortgage rates to 7.49% threatens to cool the interest-sensitive segment of the economy. CPI at 3.40% year-over-year remains above the Fed's comfort zone, keeping the disinflation glide path uneven and sustaining the higher-for-longer narrative that has underpinned bond-market volatility.

The Atlanta Fed's 3.6% GDPNow estimate, while trimmed, still implies growth well above potential, complicating the case for aggressive near-term easing.

Global Macro News

Global markets are contending with a sharpening geopolitical premium in energy. Oil surged more than 5% on Thursday after reports that the US could launch fresh strikes on Iran, though CentCom pushed back on claims of a Strait of Hormuz closure, stating 20 million barrels of crude are moving through the chokepoint daily. ↓ p.3

Continuation

Global Macro News (continued)

In Japan, Prime Minister Takaichi declared the economy no longer needs reflationary policy, a notable shift as the BOJ normalization debate continues and the yen sits at 158.31 against the dollar. India joined the US and 13 other economies in a pact addressing global manufacturing overcapacity, a signal of broadening trade-policy coordination with implications for China. Poland's finance minister touted a strong growth position into 2027, while the Bank of Canada flagged demographic shifts reshaping its economy.

Nigeria's rebuild of net FX reserves to $46 billion from below $1 billion illustrates the global reserve-accumulation theme. BlackRock's Rick Rieder called the front end of the curve "still very attractive," echoing the value-seeking tone across fixed income.

Fed Watch

The Fed's communications this week have been unusually dense, with officials speaking across Tuesday, Wednesday, and Thursday — Williams, Bowman, Schmid, Logan, Waller, and Musalem among them — a cadence that suggests active consensus-building around the policy path. With the funds rate at 3.88%, the Committee appears to be in a holding pattern, letting the data adjudicate between the resilient labor market (claims at 197,000) and inflation that remains sticky at 3.40%. The 2s10s spread narrowing to 47 bp reflects market conviction that the easing cycle will be shallow and extended rather than rapid.

Rieder's public embrace of the front end validates the carry trade at current levels, but the 6 bp rally in the 10-year suggests positioning had grown stretched after the recent selloff. Watch for any hints on the pace of balance-sheet runoff in upcoming speeches, as QT dynamics intersect with heavy Treasury supply. The GDPNow downgrade to 3.6% gives doves a marginal data point, but with claims sub-200,000, the bar for near-term cuts remains high.

The market's flattening bias implies investors see the Fed succeeding in its soft-landing calibration — for now.

US Macro Daily(Beta Mode)