Bonds & Stocks
Treasuries were set to extend their rally into a fourth week after Thursday’s jobless claims data cemented expectations the Federal Reserve will cut interest rates next week. The yield on US 10-year debt edged two basis point higher to 4.04% after falling to a five-month low Thursday, but still remained on course for a fourth week of declines. Money markets are assigning an 80% chance of two further cuts by year-end, with some expecting the Fed to act due to the weakness of the jobs market.
Economy
Bloomberg Economics expects August’s core CPI to increase briskly , but tariffs won’t be the main reason — the driver will be discretionary services like airfares and hotels. Ironically, those gains are the indirect result of easing financial conditions spurred by the reduction of tariffs in the Trump administration’s various truces and trade deals.
World
Oil extended gains on fears that Ukrainian drone attacks may disrupt flows through Russia's crude-exporting hubs on the Baltic coast. The US is expected to urge allies to impose tariffs on China and India for their purchases of Russian oil and to create a legal pathway to seize immobilized sovereign Russian assets.