U.S 30-year bonds climbed to 5.63% yesterday, touching its highest levels since 2022, mainly driven by August’s consumer spending growing at its fastest pace in over a year. This data release effectively shows that consumers and the broader economy can cope with higher interest rates, although a rate hike for later this month has dropped to 36% after the 2-year bonds dipped lower off the back of inflation falling short of expectations. All of that side, markets are still anticipating one more rate hike between now and the end of the year.
Earlier this morning, UK House Price growth slowed to a nine-month low in September as annual growth eased to 0.8% from 1.6% in August. Higher energy prices and expectations of higher interest rates have weighed on demand.
Switzerland’s inflation has also climbed to a 2-year high this morning as increasing oil prices start to filter through to the consumers. Prices in general have risen by 1% from September last year, and 0.2% above August’s reading. There doesn’t seem to be too much concern from The Swiss National Bank as inflation is currently sitting in the middle of their target range of 0% – 2%, as well as officials indicating they see the most recent acceleration in prices as temporary. Unless there is any drastic change in inflation, it is widely expected that interest rates stay unchanged throughout 2027.
Later this afternoon we have regular weekly jobs data coming out of The US in the form of Initial Jobless Claims and Continuing Jobless Claims. Both data sets are expected to show an increase in jobless and continuing claims; however it may become a non-event after yesterday’s ADP Employment figures overshot expectations by 20,000 job creations. This all leads us nicely onto tomorrow’s Non-Farm Payroll release which again could create volatility for USD currency pairs.