Weekly News Bites: Gaining a few pounds

Our top picks from this week's Morning Chat

Gaining a few pounds: The UK’s unemployment rate held steady at 4.9%, an 11-year low, while weekly wages rose by a more than expected 2.3% in the year to August. The figures show hiring continued over the turbulent, "Brexit"-tinged summer, suggesting intrinsic confidence in the UK’s economy. The data helped Sterling push to $1.23 and €1.12, mini-milestones of strength by recent standards. (20/10)

Getting riggy with it: At this morning’s US presidential debate, Donald Trump came out swinging, but began to fluster over the 90 minutes. Conversely, Hillary Clinton was unsettled at the outset, but improved over the course of the debate. While both landed some solid punches, markets appear to have given Clinton a win on points. However, the news cycle today will probably be dominated by the following Trump statement: "I cannot pledge to accept the election results, I will keep you in suspense" – unprecedented in a mature democracy. Even Al Gore – who won the popular vote in 2000, but lost in the electoral college – never went that far... at least not publicly. (20/10)

Early daze: Of the 52 S&P 500 companies that have reported results until yesterday, over 80% have reported earnings topping analysts’ forecasts. While this helped equities to a nice bounce yesterday, more importantly, it is raising hopes that a four-quarter streak of negative US earnings growth could be coming to an end. Needless to say, it’s early days: 448 companies left to report. (19/10)

Spread the love: A near doubling in the price of oil since February – from $27 to above $50 – has caused a massive rally in energy-linked high-yield bonds. The spread required above similar tenor US government bonds, which compensates for the higher chance of default, has plummeted from 19.7% to 5.9% in that time. However, just as sentiment was oversold then, it is possible investors are a tad too exuberant now. After all, much of the rally in oil prices is the result of a production freeze for which details are still scant. (18/10)

A fine kettle of Fisch: Speaking to the Economic Club of New York, Fed Vice-Chair Stanley Fischer said current low interest rates are a result of structural factors such as greying populations, and may well stay low for a long time to come. Furthermore, he pointed out future interest rate rises are dependent on things the central bank has no control over, such as technological innovation. This will not comfort those concerned a lower-than-ever equilibrium base rate – the level where economic growth neither grows nor slows – leaves less room for manoeuvre in inevitable future crises. (18/10)


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