United States:
U.S. Jobless Claims Drop in Latest Sign of Strong Labor Market
Filings for U.S. unemployment benefits declined the most in five weeks in another sign the jobs market remains strong, underscoring the outlook of Federal Reserve officials. Jobless claims fell to 216,000 in the week ended June 15, according to Labor Department figures released Thursday that were slightly below the estimate in Bloomberg’s survey of economists. The four-week average, a less-volatile measure, edged up to 218,750. Jobless claims near historically low levels point to employers struggling to find workers and looking to retain them. The improvement is consistent with the Fed’s characterization this week that the labor market remains strong, a bright spot propping up wages and spending.
Oil Surges After Iran Downs U.S. Drone and Fed Signals Rate Cut
Oil rose after Iran said it shot down a U.S. spy drone in its airspace, stoking Middle East tensions further after the attack on two tankers last week, while a more dovish stance from the Federal Reserve lifted financial markets. Futures climbed as much as 3.3% in New York. The reported drone downing follows a missile strike by Yemeni rebels overnight on Saudi Arabia. The Fed’s readiness to lower interest rates for the first time since 2008 boosted stock markets and weakened the dollar, spurring demand for commodities priced in the U.S. currency. Oil also gained after U.S. government data showed inventories declined by 3.1 million barrels last week, more than analysts had estimated. Crude spiked as much as 4.5% a week ago after two oil tankers were attacked near the Strait of Hormuz, with the U.S. and Saudi Arabia blaming Iran for the assault. Still, swelling American inventories and a deepening U.S.-China trade war have dented the demand outlook and weighed on prices over the past two months. Washington and Beijing are set to resume talks next week at the G-20 summit in Osaka. “Geopolitics is helping oil bulls to make a spectacular come-back after a few days’ of directionless trading,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London.
Europe:
BOE Sees Rising No-Deal Brexit Worry in Tension With Markets
The Bank of England acknowledged rising concerns over a no deal Brexit as it kept interest rates on hold and cut its near-term economic growth forecast to zero. While officials, led by Governor Mark Carney, said they still see the need for interest-rate hikes in coming years if their forecasts bear out, they also acknowledged that investors are taking a different view than the bank’s assumption of a smooth Brexit. That’s left the BOE’s outlook at at odds with markets, where the possibility that the U.K. will leave the European Union without a deal has pushed the pound lower and prompted investors to start pricing in rate cuts. The Federal Reserve and others are moving toward more stimulus amid mounting global risks. “Domestically, the perceived likelihood of no-deal Brexit has risen,” the bank said in a summary of monetary policy following its June meeting. The BOE said that downside risks to growth have increased since May, and underlying expansion has weakened slightly in the first half. It cut its prediction for this quarter to stagnation from 0.2% growth, a forecast in line with the median estimate of economists in Bloomberg’s latest survey. The pound slid against the dollar after the minutes, while U.K. gilts rallied.