The UK employment report indicated a slight increase in the unemployment rate, although wage growth remains high. This has led to expectations of two rate cuts by the end of the year. The only other key event to watch is the final Eurozone CPI data, which is not anticipated to impact the markets significantly.
In the upcoming American session, attention will be on the US Jobless Claims and Retail Sales figures. Initial Claims are anticipated to be 235K compared to 227K previously, while Continuing Claims are projected to remain at 1965K. The data suggests a stable “low firing, low hiring” labour market.
Us Retail Sales Month Over Month
US Retail Sales Month-over-Month (M/M) is expected to be 0.1%, improving from a previous -0.9%, with the Ex-Autos M/M measure predicted at 0.3% from -0.3%. The Control Group is forecasted at 0.3%, slightly down from 0.4% prior. Despite the volatility of retail sales data, it is considered a market-moving release.
Central bank speakers for the day include ECB’s Villeroy, Fed’s Kugler, and Fed’s Daly, Cook, and Waller at various times, offering potential insights into future economic policy directions.
We see the softer UK employment report as a key catalyst for the coming weeks. The unemployment rate ticking up to 4.3% has solidified market pricing, with SONIA futures now pointing towards two full rate cuts from the Bank of England before year-end. This reinforces a global theme of central banks looking past sticky inflation towards slowing growth.
Upcoming US jobless claims will be viewed through this same lens, and we will watch for signs of weakness. A number above the expected 235K would support the “low firing, low hiring” narrative, especially after the latest JOLTS data showed job openings falling to a three-year low. This trend suggests the labor market’s resilience is fading, which could pressure the Federal Reserve.
Central Bank Speakers
Even with its volatility, the US retail sales report could be the most significant market-mover. With US consumer credit card debt recently surpassing $1.1 trillion, any weakness in the headline 0.1% expectation could signal consumer exhaustion. Historically, a significant miss here causes a sharp drop in Treasury yields, and we would expect a similar reaction this time.
The series of central bank speakers should provide further direction, and we will be listening for a dovish consensus. We will pay close attention to any remarks from Waller, who has been influential in guiding market expectations toward a more patient policy stance. Conversely, any unexpectedly hawkish tone from neutral voters like Kugler or Cook would present a prime opportunity to position for a reversal.
