Labour market signals added to the narrative, with weekly jobless claims in the US rising by 27,000 to 263,000—the highest since October 2021—surpassing estimates and reinforcing the view that the job market is softening.
As per BNN Bloomberg, “the job market has to be weak enough to get the Fed to cut interest rates, which can give a kickstart to the economy and to prices for investments, but not so much that it causes a recession.”
The bond market responded with the yield on the 10-year US Treasury falling to 4 percent.
According to CNBC, the CME FedWatch tool showed near certainty that the Federal Reserve will cut its benchmark rate by a quarter percentage point at its September 17 meeting, with some market participants also considering the possibility of a half-point cut.
Sector performance reflected expectations for lower rates, with banks, consumer companies, real estate, and homebuilders all advancing.