Yesterday, markets put aside the modest reignition of inflationary pressures and instead diverted their attention onto the latest weekly initial jobless claims figure, that showcased a surprise rise to levels last observed before in October of 2021.

According to the latest CPI print for the month of August, price pressures saw an increase of 0.2% and climbed to the 2.9% level, matching analysts estimates whereas the Core rate, which excludes volatile food and energy prices, were stayed unchanged at the 3.1% area. Despite worrisome echoes, that this print may be indeed preliminary evidence that Trump’s tariffs are reigniting inflation, markets fixated instead, on another labour market crack.

The weekly initial jobless claims figure, a report that counts the number of people that seek governmental aid after they were either fired or voluntarily chose to step away from their job, climbed to 263k, reaching its highest levels in over 4 years and acted as another precautionary tale that the robustness of the US labour market is now being tested.

The above release alongside the sequential softness of NFP prints over the past three months but also the 911k downward revision of jobs created over the past year, forced market participants to unanimously come to the conclusion that the Federal Reserve will have no other choice, but to slash rates at next week’s meeting.

Money markets have now fully priced in the scenario for a 25bps cut by the central bank and odds for a larger 50bps, albeit being in the single digits, showcase the gravity of the employment factor that markets believe the Fed will also focus on, whilst making their decision next week.

In the FX market, the greenback fell and closed the session in the reds, whereas stock indices rose for another day, extending their weekly rally. Bond yields also slipped, pulling further away from the recently touched 5% ceiling, whereas gold and silver continue to make headway, challenging new highs.

Technical Analysis

Silver Chart – Silver smashes another 2011 year high and marches north after bets for Fed cuts strengthen

Resistance: 42.30 (R1), 43.40 (R2), 44.50 (R3)
Support: 40.60 (S1), 39.70 (S2), 38.50 (S3)