Bonds & Stocks
Data showing US inflation cooled at a startling clip last month ignited stock and bond markets, bolstering bulls with prospects for more decisive Federal Reserve rate cuts in 2026. Bitcoin rallied. Despite numerous caveats surrounding another high-profile report impacted by the government shutdown, traders welcomed the slowest increase in consumer prices since early 2021. Equities extended gains in early trading, which had also been fueled by an upbeat outlook from Micron Technology Inc. Treasury yields dropped across the curve, joining a slide in the dollar as the latest data offered some relief to traders worried about more pronounced inflation that could keep a lid of rate cuts.
Economy
Applications for US unemployment benefits fell after a spike in the previous week, underscoring the choppy nature of the data at this time of year. Initial claims decreased by 13,000. Initial claims decreased by 13,000 to 224,000 in the week ended Dec. 13, according to Labor Department data released Thursday. The median forecast in a Bloomberg survey of economists called for 225,000 applications. Holiday-related factors often lead to swings in weekly claims data, which will likely continue through the end of the year.
World
The Bank of England cut interest rates to the lowest in almost three years in a pre-Christmas boost for UK households, while suggesting further decisions on easing policy will be a “closer call.” The Monetary Policy Committee voted 5-4 to lower the benchmark rate by a quarter point to 3.75%, minutes from its meeting showed on Thursday. It was the first reduction since August after the nine-member panel skipped moves at the previous two decisions. Governor Andrew Bailey switched sides to back the widely anticipated loosening of policy.