



Key data to move markets today
EU: German Retail Sales, German Unemployment Change, Spanish Harmonised Index of Consumer Prices, Italian GDP and CPI, German CPI and Harmonised Index of Consumer Prices, and a speech by ECB Vice President Luis de Guindos.
US: Core Personal Consumption Expenditures Price Index, Personal Consumption Expenditures Price Index, Personal Income, Personal Spending, Chicago PMI, Michigan Consumer Expectations Index, Michigan Consumer Sentiment Index, UoM 1-year and 5-year Inflation Expectations.
US Stock Indices
Dow Jones Industrial Average +0.16 %.
Nasdaq 100 +0.58 %.
S&P 500 +0.32 %, with 7 of the 11 sectors of the S&P 500 up.
On Thursday, the S&P 500 and the Dow Jones Industrial Average reached new closing highs, buoyed by a government report that indicated surprising economic strength.
The S&P 500 advanced +0.32% to close at 6,501.86, marking its 20th record close of the year. The Nasdaq composite also gained +0.53%. The Dow Jones Industrial Average rose by 71.67 points, or +0.16%, achieving its second all-time high close in 2025.
Looking ahead, traders are awaiting today's release of the Personal Consumption Expenditures (PCE) index, the Fed's preferred measure of inflation.
In corporate news, Dell Technologies raised its annual outlook after reporting Q2 sales and profits that exceeded analyst estimates, driven by robust demand for its AI servers.
Gap indicated that its margins are expected to shrink this year, suggesting that tariffs are impeding the company's recent turnaround efforts.
Snowflake shares surged after the company issued a strong outlook, which helped to alleviate investor concerns about the potential impact of a slowing economy and new competition from AI startups on software vendors.
CrowdStrike Holdings saw its stock rise following a strong Q2 earnings report, despite a sales forecast that narrowly missed analyst projections.
Best Buy warned that tariffs continue to negatively affect its business as it heads into the crucial holiday shopping season. This cautionary note tempered the positive news of the electronics retailer's first sales increase in over three years.
Bath & Body Works reported a profit that fell short of expectations for the first time since 2020, highlighting the challenges facing its new chief executive officer in executing a successful turnaround.
S&P 500 Best performing sector
Communication Services +0.94%, with The Trade Desk +5.15 %, TKO Group Holdings +2.42 %, and Alphabet +2.00 %.
S&P 500 Worst performing sector
Utilities -0.87%, with Nextera Energy - 2.44%, Consolidated Edison -1.90%, and Entergy -1.59%.
Mega Caps
Alphabet +2.00 %, Amazon +1.08 %, Apple +0.90 %, Meta Platforms +0.50 %, Microsoft +0.57 %, Nvidia -0.79%, and Tesla -1.04%.
Information Technology
Best performer: Datalogic +7.01 %.
Worst performer: Microchip Technology -2.10%.
Materials and Mining
Best performer: Packaging Corporation of America +2.83 %.
Worst performer: Albemarle -3.15%.
European Stock Indices
CAC 40 +0.24 %.
DAX -0.03%.
FTSE 100 -0.42%.
Commodities
Gold spot +0.75% to $3,418.85 an ounce.
Silver spot +1.35% to $39.07 an ounce.
West Texas Intermediate +2.33% to $64.25 a barrel.
Brent crude +0.80% to $68.33 a barrel.
On Thursday, gold prices reached a five-week peak, driven by a weaker dollar and heightened demand for safe-haven assets amid persistent concerns regarding the Fed's autonomy.
Spot gold climbed +0.75%, reaching $3,418.85 per ounce, its highest point since 23rd July. This increase was supported by a -0.29% decline in the dollar index, which made gold, priced in US dollars, more accessible to international investors.
Oil prices rose Thursday following a White House statement indicating the US President's disapproval of Russia's overnight missile and drone attacks on Ukraine.
Brent crude futures settled 54 cents higher or +0.80% to $68.33 per barrel. WTI crude futures rose $1.46, or +2.33%, to $64.25 per barrel.
Early Thursday, Russia launched lethal missile and drone strikes on Ukraine, which Kyiv officials reported resulted in at least 21 deaths. Concurrently, the Ukrainian military stated it had used drones to target two Russian oil refineries. White House Press Secretary Karoline Leavitt informed reporters that President Donald Trump would issue a statement on the situation later in the day.
Traders are closely monitoring India's reaction to US pressure to cease purchasing Russian oil, especially after the US President doubled tariffs on Indian imports to 50% on Wednesday. Despite this pressure, Russian oil exports to India are projected to increase in September.
Crude oil supply is also poised to rise, following a plan by OPEC+ to increase its September output by 547,000 barrels per day.
Furthermore, Russian crude supplies to Hungary and Slovakia via the Druzhba pipeline have resumed. The flow was restored after a brief outage caused by a Ukrainian attack in Russia last week, as confirmed by Hungarian oil company MOL and Slovakia's economy minister.
Note: As of 5 pm EDT 28 August 2025
Currencies
EUR +0.37% to $1.1679.
GBP +0.09% to $1.3507.
Bitcoin +0.51% to $112,101.02.
Ethereum -0.74% to $4,490.44.
On Thursday, the dollar weakened against major currencies as traders increased their bets on a potential interest rate cut by the Fed next month. This shift followed a statement by New York Fed chief John Williams, who signalled that such a move was possible.
The US dollar has faced renewed pressure from the White House's intensified campaign to influence monetary policy. This includes the President's attempt to remove Fed Governor Lisa Cook, who filed a lawsuit Thursday arguing that the President lacks the authority to do so. The lawsuit could trigger a prolonged and protracted legal battle.
Despite some improvement in the dollar's performance after data showed a slight decline in jobless claims and a better-than-expected expansion in GDP, it failed to really rally during the US afternoon session. The dollar index ended the day -0.29% at 97.90, marking its second consecutive day of decline.
The euro saw a +0.37% gain, reaching $1.1679, while the British pound sterling rose +0.09% to $1.3507. Against the Japanese yen, the dollar fell -0.31% to ¥146.93 yen.
In a CNBC interview on Wednesday, Williams stated that a rate cut was likely at some point but emphasised that policymakers would need to analyse upcoming economic data to determine if a cut at the FOMC 16th - 17th September meeting would be appropriate.
In a separate development, Ryosei Akazawa, Japan's chief trade negotiator, canceled a scheduled trip to Washington at the last minute. This action has delayed the announcement of details regarding Japan's $550 billion investment pledge to the US as part of a tariff deal. A Japanese government spokesperson stated that the decision was made after discussions with the US revealed points requiring further administrative-level negotiation.
Fixed Income
US 10-year Treasury -3.1 basis points to 4.208%.
German 10-year bund -0.4 basis points to 2.698%.
UK 10-year gilt -3.7 basis points to 4.702%.
US Treasury yields were mixed on Thursday. This was primarily driven by profit-taking and month-end portfolio rebalancing, rather than any fundamental shift in expectations regarding Fed policy.
After falling to 3.611% on Wednesday - its lowest since 1st May - the two-year note yield was up +2.0 bps at 3.641%. Conversely, the 10-year note yield was -3.1 bps to 4.208%, reaching a low of 4.203%, a level not seen since 5th August. The yield on the 30-year bond also fell, decreasing -4.5 bps to 4.878%. The yield curve between the two-year and 10-year notes widened to 56.7 bps, following a steepening to 63.5 bps on Wednesday, the steepest since 22nd April.
The rally in longer-dated debt has lagged behind that of shorter-dated notes this week. This is largely due to concerns about the potential consequences of a more accommodative Fed policy. A politically influenced Fed that maintains interest rates lower than justified could lead to higher inflation and diminish foreign investor demand for US debt due to concerns about its credibility. A worsening fiscal outlook is also expected to continue weighing on longer-dated debt.
On Thursday, the Treasury Department successfully sold $44 billion in seven-year notes, concluding this week's sales of short- and intermediate-dated debt totaling $183 billion.
The auction saw a high yield of 3.925%, just under half a basis point above its pre-auction trading level. Although the bid-to-cover ratio of 2.49x was below average, indirect bidders - often foreign central banks - purchased a larger than usual share, at 77.4% of the sale. This follows decent demand for a $70 billion sale of five-year notes on Wednesday and strong demand for a $69 billion sale of two-year notes on Tuesday.
Looking ahead, the week's primary economic release will be the Personal Consumption Expenditures (PCE) data today. The US bond market will be closed Monday in observance of the US Labor Day holiday.
Fed funds futures traders are now pricing in a 86.2% probability of a rate cut in September, up from 75.0% last week, according to CME Group's FedWatch Tool. Traders are currently anticipating 55.5 bps of cuts by year-end, higher than the 48.5 bps expected last week.
Across the Atlantic, the yield on France's 10-year government bond saw a slight decline, but remained near its highest level since March. This reflects ongoing concerns about the country's fiscal stability. Prime Minister François Bayrou has called for a no-confidence vote on 8th September to secure support for his administration's plan to reduce debt and control the deficit. However, opposition parties from both the left and the right have indicated they will reject his proposal, which could lead to his removal from office. Such an outcome could pave the way for new legislative elections, potentially delaying crucial deficit reduction efforts.
The yield on the 10-year French government bond fell by -3.1 bps to 3.484% on Thursday, after reaching its highest level since March at 3.540% the previous day. The spread between French and German 10-year yields stood at 78.6 bps. This spread is near the widest level it has been since April, a level it reached on Wednesday. For context, this spread briefly reached 90 bps last year, its widest since the 2012 euro zone crisis. In contrast, the spread between French and Italian 10-year bonds was relatively stable, narrowing 0.1 bps to just 6.2 bps.
The German 10-year yield was down -0.4 bps at 2.698%. The two-year yield, which is highly sensitive to interest rate expectations, rose +2.0 bps to 1.936%, while the 30-year yield declined by -1.0 bps to 3.309%. The longer end of the yield curve remains a focal point for investors, as 30-year yields in both Germany and France have recently surged to their highest levels since 2011.
Money market traders are currently pricing in only a 9.5 bps easing by the end of the year, which implies about a 38% chance of a single quarter-point interest rate cut by the ECB.
Note: As of 5 pm EDT 28 August 2025
Global Macro Updates
Jobless claims decreased, Q2 GDP revised higher. US economic data released Thursday showed a slight decrease in jobless claims and an upward revision to Q2 GDP growth.
Initial jobless claims for the latest week were reported at 229,000, slightly above the consensus forecast of 228,000, but lower than the previous week's downwardly revised figure of 234,000. The four-week moving average of initial claims rose 2,500 to 228,500. Continuing claims came in at 1.954 million, better than the expected 1.960 million and a decrease from the prior week's revised 1.961 million.
The second reading of Q2 GDP showed a stronger-than-expected growth rate. The Q2 GDP was revised up to 3.3%, surpassing both the consensus of 3.2% and the initial reading of 3.0%. This upward revision was primarily driven by higher consumer spending and lower imports. On an annualised basis, Q2 GDP is now at 2.1%, slightly above the 2.0% consensus. The GDP Chain Price Index for the quarter, an indicator of inflation, was reported at 2.0%, in line with both expectations and the previous reading.
In the housing market, pending home sales for July unexpectedly declined by 0.4% on a month-over-month basis, a reversal from expectations of a 0.5% increase.
Lisa Cook sued to prevent her firing by President Trump. As expected, Fed Governor Lisa Cook has filed a lawsuit in a Washington, DC district court, seeking ‘immediate declaratory and injunctive relief to confirm her status as a member of the Board of Governors’. The lawsuit highlights the importance of the Fed's independence. It references the Supreme Court's recent recognition of the Fed's unique status in the case of Trump v. Wilcox.
Cook's filing argues that removal ‘for cause,’ as specified in the Federal Reserve Act, has historically been defined by criteria such as ‘inefficiency, neglect of duty, or malfeasance in office.’ She contends that an unproven allegation of a potential error on a mortgage form she completed years ago does not meet this standard.
The White House has not yet commented on the lawsuit. However, on Wednesday, Treasury Secretary Bessent told Fox Business that accusations like those against Cook could erode public trust in the central bank and reiterated his encouragement for Chairman Powell to conduct an internal review of the Fed.
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