US initial jobless claims fell -14k to 218k in the week ending September 19, much better than expectation of 240k. Four-week moving average of initial claims fell -3k to 238k.
Continuing claims fell -2k to 1926k in the week ending September 13. Four-week moving average of continuing claims fell -4.5k to 1930.
US durable goods orders surged 2.9% mom to USD 312.1B in August, far stronger than the expected -0.5% mom contraction. Excluding transportation, orders still rose 0.4% mom to USD 201.9B, beating forecasts for a small decline of -0.1% mom. Ex-defense orders climbed 1.9% mom to USD 290.7B.
The headline gain was led by a 7.9% mom jump in transportation equipment to USD 110.2B, but the breadth of gains pointed to firm underlying demand.
The SNB opted to keep its policy rate at 0.00% in September, delivering the first pause since its rate-cutting cycle began in December 2023. The move matched expectations and reflects a balance between subdued inflation and a weaker growth backdrop.
The central bank noted that inflation has edged up slightly, from -0.1% in May to 0.2% in August, driven mainly by tourism and higher prices for imported goods. Still, it stressed that inflationary pressures remain broadly unchanged since June, with the conditional forecast holding within its definition of price stability across the “entire forecast horizon”. Annual inflation is projected at 0.2% in 2025, 0.5% in 2026, and 0.7% in 2027, assuming interest rates stay at 0%.
However, the SNB warned that the economic outlook has worsened due to “significantly higher US tariffs.” It said the measures are expected to weigh on exports and investment, with the machinery and watchmaking sectors particularly exposed. As a result, the SNB maintained its GDP forecast of 1–1.5% growth for 2025 but downgraded expectations for 2026 to just under 1%.
SNB’s policy decision is the main focus for today’s European session, with the central bank widely expected to keep rates unchanged at 0.00%. This would mark its first pause since December 2023, reflecting both steady inflation trends and a more stable external backdrop.
Inflation has stabilized slightly above 0% since June, easing fears of a return to deflation. With the ECB also settling at 2.00%, appreciation pressure on Swiss Franc has moderated, reducing the need for the SNB to counter imported disinflation. Additionally, Chairman Martin Schlegel has stressed that the bar for reintroducing negative rates is high, further supporting a steady stance.
Market consensus is strongly aligned with this view. A Reuters poll taken last week showed 40 out of 41 economists expect no change, with only one forecasting a cut to -0.25%. More than 80% of economists see rates remaining on hold through year-end, and a strong majority (21 of 25 economists) expect policy to stay unchanged at 0.00% even through 2026.
Swiss Franc has been one of the better performers this month, underpinned by its safe-haven appeal amid persistent geopolitical risks, particularly the war in Ukraine. Expectations of SNB stability have also lent support. That said, the rebound in U.S. and European bond yields has capped further upside for Franc, although the pressure has weighed more heavily on Yen.
Technically, for the near term, further rally is expected in CHF/JPY as long as 55 D EMA (now 183.63) holds. Current rise from 181.45 is seen as the fifth wave of the whole rally from 165.83. It should be on track to 61.8% projection of 173.06 to 186.02 from 181.45 at 189.45.
The bigger hurdle would be in 61.8% projection of 137.40 to 180.05 from 165.83 at 194.88, which could limit upside and bring a more notable consolidation or pullback.
The BoJ’s July meeting minutes revealed a growing debate among policymakers over the need to raise rates toward neutral levels. One member argued that with prices elevated and the output gap near zero, it was appropriate for the BoJ to “return the policy rate to its neutral level where possible.”
Another member warned against being “overly cautious,” saying the central bank should not miss the opportunity to hike rates, particularly as stock markets have reacted positively to the recent U.S.–Japan trade deal. Several others echoed this view, suggesting that another hike could be feasible before year-end if tariffs cause only limited drag on the economy.
Meanwhile, policymakers were divided on inflation. While one saw the overshoot as temporary and food-related, others highlighted the risk that persistent food price increases could entrench higher inflation expectations.
The debate has since intensified, as seen in September’s meeting when two members dissented in favor of lifting rates to 0.75%. The growing hawkish faction raises the prospect that the BoJ could still deliver another rate hike in the coming months, particularly if growth and inflation prove resilient.
San Francisco Fed President Mary Daly said she “fully supported” last week’s rate cut and expects more reductions will likely be needed. However, at an event overnight, she stressed that the timing for further cuts remains uncertain.”It’s hard to say”, she said.
Daly described the labor market as no longer solid but not weak either, calling it “sustainable.” She said she does not want to see further softening, noting that the Fed’s latest decision was effectively an “insurance” move to support jobs while inflation continues to moderate.
The economy, she added, still requires “monetary policy bridling, but not as much as we had.”
BoE MPC member Megan Greene said in a speech overnight that UK inflation remains an outlier among developed peers, with headline CPI running above target for over four years and rising again over the past year. She noted that disinflation has been concentrated in rate-sensitive sectors, suggesting “the bulk of disinflation may have already come through”, while labor market slack has emerged.
Greene argued that the data has the “hallmark of an adverse supply shock,” but said second-round wage effects are unlikely to pose major risks as the labor market loosens. She added that while risks from trade persist, they have eased somewhat, and GDP growth is expected to rebound without a sharp deterioration in jobs.
She stressed two lessons from recent supply shocks: when inflation persistence is uncertain, policymakers should prioritize inflation to prevent it from becoming entrenched, and that prices may respond faster than output when inflation is elevated.
Against that backdrop, she said “an appropriate response to the uncertainty and risks we are currently facing should involve a cautious approach to rate cuts going forward”, reinforcing her vote last week to keep Bank Rate at 4%.
Germany’s Ifo Business Climate Index fell to 87.8 in September from 88.9, with Current Situation Index slipping from 86.4 to 85.7 and Expectations falling from 91.4 to 89.7. The institute said prospects for recovery have “suffered a setback”.
By sector, weakness was broad-based. Manufacturing sentiment dropped further, with companies reporting weaker orders and fading optimism among capital goods producers. Services took the hardest hit, plunging to -3.0, the lowest since February, as expectations grew more pessimistic. Trade sentiment also deteriorated, while construction offered a rare bright spot with modest improvement.
Aussie strengthened broadly in Asian session after inflation came in hotter than expected. Headline CPI rose to 3.0%, putting price growth back at the top of the RBA’s 2–3% target band.
For next week’s RBA meeting, the outcome makes little difference — a hold at 3.60% was already priced in. But for November, markets will have to reassess. With headline and core measures still sticky, the RBA may decide that it is premature to deliver another rate cut.
Governor Michele Bullock’s comments earlier this month resonate more strongly after today’s release. She highlighted that households are beginning to spend again after a period of restraint, warning that momentum could limit how far and fast the RBA can ease. The CPI data reinforces her message. And, even if a November cut is delivered, the broader policy path is unlikely to accelerate.
Technically, AUD/CAD’s strong rebound today suggests that corrective pullback from 0.9225 could have completed at 0.9075 already. Break of 0.9225 will resume the whole rally from 0.8440 to 61.8% projection of 0.8440 to 0.9041 from 0.8902 at 0.8273. Firm break there will pave the way to 100% projection at 0.9503.
Nevertheless, below 0.9119 minor support will delay the bullish case, and bring more consolidations in the near term.
AUD/NZD is also extending its advance, aided by speculation of a 50bps RBNZ cut at the next meeting. Sustained trading above 200% projection of 1.0649 to 1.0920 from 1.0744 at 1.1286 will pave the way to 261.8% projection at 1.1453.
However, below 1.1229 minor support will bring consolidations first.
Australia’s monthly CPI accelerated from 2.8% yoy to 3.0% yoy in August, above expectations of 2.8% yoy and the highest reading since July 2024. The rise was driven by housing (+4.5%), food and non-alcoholic beverages (+3.0%), and alcohol and tobacco (+6.0%).
Core inflation showed stickier trends. CPI excluding volatile items and holiday travel rose from 3.2% yoy to 3.4% yoy. Trimmed mean edged down slightly to 2.6% from 2.7%, but remain well above June’s 2.1% yoy.
RBA is widely expected to hold interest rate unchanged next week. But the stronger core reading will keep November’s meeting live, with rate cut expectations now tempered by concerns that inflation may not be easing as quickly as hoped.
Japan’s private sector lost momentum in September, with the flash PMI Composite slipping from 52.0 to 51.1, the weakest in four months. Manufacturing was the clear drag, with the headline index down from 49.7 to 48.4 and output falling from 49.8 to 47.3. Services held broadly steady at 53.0, down from 53.1.
S&P Global’s Annabel Fiddes said services remain the “key growth engine,” offsetting a “deepening downturn” in manufacturing. Demand trends diverged sharply, with services seeing another solid rise in sales, but factories reporting the fastest drop in new orders since April.
Cost pressures also remain high. Input price inflation has eased from earlier in the year but is still consistent with a sharp rate overall, prompting firms to raise selling prices to protect margins. Companies were more cautious on hiring, with employment growth slowing to the weakest pace in two years.
Fed Chair Jerome Powell said in a speech overnight that the U.S. labor market is showing a “marked slowing” in both supply and demand, calling it an unusual and challenging development. He noted that job creation now appears to be running below the “breakeven” rate needed to keep unemployment rate stable, though other indicators such as job openings and claims remain broadly steady.
On inflation, Powell stressed that recent price pressures are largely tariff-driven rather than evidence of broad-based overheating. Disinflation in services, including housing, continues, and most longer-term inflation expectations remain anchored around the Fed’s 2% goal. Near-term expectations have edged higher on tariff headlines, but Powell argued these effects are likely to be transitory.
He described the tariff shock as a “one-time shift in the price level” that will be “spread over several quarters” as supply chains absorb higher costs.
Powell reaffirmed that Fed policy is “not on a preset course”. Decisions will continue to depend on incoming data and the balance of risks, with the FOMC seeking to manage both slowing job growth and temporary tariff-related inflation without overreacting.
Chicago Fed President Austan Goolsbee said he sees scope for interest rates to come down “a fair amount” over time if stagflation risks fade, though the adjustment should be “gradual”. Speaking to CNBC, he suggested neutral rate is 100–125bps below the current 4.00–4.25% range, implying a longer-run policy level around 3%.
Goolsbee stressed that inflation risks remain real, noting price growth has been above target for more than four years. He cautioned against being “overly upfront aggressive” with rate cuts despite growing confidence that inflation can ease back toward 2%.
At the same time, he highlighted that the labor market is cooling at a “mild to modest” pace, providing room for cautious policy adjustment.
US business activity softened in September, with PMI Composite falling from 54.6 to 53.6. Manufacturing slipped from 53.0 to 52.0, while services eased from 54.5 to 53.9. Despite the slowdown, the surveys still indicate the economy expanded at a solid 2.2% annualized pace in Q3.
Chris Williamson of S&P Global noted that growth has cooled since peaking in July, with hiring momentum also weakening. Firms reported softer demand conditions, limiting their ability to raise prices.
Tariffs continued to push up input costs across manufacturing and services, but fewer companies were able to pass those costs on, hinting at “squeezed margins but boding well for inflation to moderate”..
The survey suggested consumer inflation will remain above the Fed’s 2% target in the near term, though signs of inventory accumulation in manufacturing could further dampen price pressures ahead.
Fed Governor Michelle Bowman said in a speech that she welcomes the Fed’s decision to start easing last week, noting that the balance of risks between inflation and employment has shifted. She said tariffs no longer appear likely to deliver a persistent inflation shock, which has reduced upside risks to price stability.
With demand softening and labor market conditions turning fragile, Bowman emphasized that the Fed must focus on its employment mandate. She cited benchmark payroll revisions as a clear warning, saying the Fed is at “serious risk of already being behind the curve” in addressing job market deterioration.
She argued the Fed should “preemptively stabilize and support labor market conditions.” If the current conditions continue, Bowman said, “we will need to adjust policy at a faster pace and to a larger degree going forward.”
Additionally, Bowman cautioned against a strict, backward-looking interpretation of data dependence, saying it could force the Fed to implement “abrupt and dramatic policy actions” later if it delays action now. Instead, Bowsheman urged a more “proactive forward-looking approach” framework, one that accounts for how the economy is likely to evolve rather than relying solely on the latest data points.
OECD’s latest Interim Economic Outlook projected global GDP growth of 3.2% in 2025, an upward revision from 2.9% in June, before easing to 2.9% in 2026. The agency said tariffs and policy uncertainty remain headwinds for trade and investment, but the upward revision shows the drag is proving smaller than previously feared.
In the U.S., GDP growth is projected to slow sharply, from 2.8% in 2024 to 1.8% in 2025 and 1.5% in 2026. The drag reflects the combined effect of tariff hikes, weaker net immigration, and a reduced federal government workforce.
China is also expected to lose momentum, easing from 4.9% in 2025 to 4.4% in 2026 as earlier stimulus fades and tariffs start to bite more fully.
In the Eurozone, growth is forecast at 1.2% in 2025 and 1.0% in 2026. The region continues to face increased trade frictions and geopolitical uncertainty, though these will be partially offset by stronger public investment programs and looser credit conditions.
On prices, the OECD expects headline G20 inflation to fall from 3.4% in 2025 to 2.9% in 2026, reflecting weaker growth and softening labor markets. Core inflation in advanced economies is forecast to decline only marginally, from 2.6% to 2.5%, suggesting underlying price stickiness remains.
The report warned that risks to disinflation persist. Goods prices have edged higher again in some economies, and services inflation remains stubborn.
BoE Chief Economist Huw Pill signaled a softer tone on inflation risks, saying in a speech he is “more comfortable now” than six to twelve months ago. While he had previously stressed the balance of risks lay more on the inflationary side, he acknowledged that as time has passed and markets have repriced, the risks are shifting.
Pill has been among the more hawkish members of the MPC, opposing last week’s decision to slow the pace of quantitative tightening. The Bank will now reduce its gilt holdings by GBP 70bn over the coming year, down from GBP100bn last year, a move Pill resisted.
He explained his preference for “continuity and consistency” in QT, arguing that the framework works best when Bank Rate is the active tool for policy adjustments. With rates far from the lower bound, the MPC has flexibility to use Bank Rate to achieve its inflation target while QT runs in the background.
UK business activity weakened sharply in September, with the flash composite PMI dropping from 53.5 to 51.0, a 4-month low. Manufacturing fell further into contraction from 47.0 to 46.2. Services slipped from 54.2 to 51.9, pointing to a broad loss of momentum across sectors.
S&P Global’s Chris Williamson described the report as a “litany of worrying news,” citing slumping overseas trade, worsening confidence, and steep job losses. The survey signalled around 50,000 job cuts over the past three months, underscoring that the economy is “almost stalling.”
The only bright spot was softer price pressures, with firms reporting one of the smallest increases in goods and services prices since the pandemic. For the BoE, the combination of weakening growth, easing inflation, and rising unemployment may shift the debate back toward a “more dovish stance” in the months ahead.
Eurozone flash PMIs for September showed a mixed picture, with manufacturing slipping back into contraction while services drove growth. The manufacturing index fell from 50.7 to 49.5, but services rose from 50.5 to 51.4, a 9-month high, lifting the Composite PMI from 51.0to 51.2 — its strongest in 16 months.
Hamburg Commercial Bank’s Cyrus de la Rubia said the bloc is “still on a growth path,” though far from gaining “any real momentum”. Germany’s recovery stood out, with manufacturing falling from 59.8 to 48.5 but services jumping to 52.5, pushing its Composite PMI from 50.5 to 52.4 (a 16-month high). France lagged, with both manufacturing and services sliding back below 50, leaving its composite at 48.4, down from 49.8 and a 5-month low.
De la Rubia cautioned that French political uncertainty had disrupted production plans, while order books in both Germany and France showed significant declines. Hiring has now “come to a halt” across the bloc, with sluggish job creation in services and sharper losses in manufacturing. Confidence in rising output has dipped.
On the inflation side, cost pressures in services have “eased slightly” but remain unusually high, while selling prices “cooled more noticeably”. That combination could give the ECB reason to consider whether a rate cut before year-end is back on the table.
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Fed’s Schmid: Cut was risk management as labor risks rise
Kansas City Fed President Jeffrey Schmid said the Fed’s 25 bps cut last week was a “reasonable risk-management strategy” in light of signs that the labor market could weaken more abruptly than anticipated.
Yet, Schmid acknowledged that inflation remains “too high,” even as the labor market, while cooling, remains “largely in balance.” He argued that moving policy to an “only slightly restrictive” level is the right place for now, offering support for employment while still leaning against inflation.
He declined to signal where he sees policy heading, saying he will stay “data-dependent” in weighing any further moves.