The data coming from the U.S. could fuel discussions about the Fed's future interest rate path. While the data keeps labor market risks alive, it also hints at the possibility of a pause in inflation's decline.
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Jobless claims for the week ending October 11 came in at 241K, significantly below expectations of 260K. More than half of the claims last week were from states affected by Hurricane Helene. However, this week, claims in those states unexpectedly fell. Still, the possibility remains that some of those affected by the hurricane have not yet been able to file their claims.
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In addition, continuing claims for the week ending October 5 increased by 9,000 from the revised figures of the previous week, reaching 1.867M. This marks the highest level since July and keeps part of the market's attention focused on labor market risks.
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On the other hand, retail sales, considered a leading indicator of inflation, rose 0.4% in September compared to the previous month. This significantly exceeded the prior 0.1% increase and came in above the 0.3% market expectations. Additionally, the control group, regarded as a more precise gauge of consumer spending, increased by 0.7% following a previous rise of 0.3%. These figures underscore the resilience of consumer spending in the U.S.
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When the retail report is evaluated alongside the weekly labor report, expectations for a 25 basis point rate cut by the Fed next month were largely unaffected. However, the likelihood of rates being held steady, which was priced at 6.3% the day before, rose to 11.1% after the data. This provides a tailwind for the U.S. dollar.