· The U.S. dollar tumbled and debt yields pared sharp gains on Friday on a report that North Korea is preparing to test a long-range missile, reversing earlier jumps after U.S. jobs data for September raised the likelihood of an interest rate hike in December. The dollar index .DXY fell 0.17 percent.
The euro EUR= rebounded 0.2 percent to $1.1733, while the Japanese yen reversed course to strengthen 0.16percent at 112.63 per dollar.
Benchmark 10-year notes US10YT=RR fell 5/32 in price to yield 2.3697 percent, paring gains that earlier had sent yields above 2.4 percent.
· Staggering from the impact of hurricanes that walloped Texas, Florida and neighboring states, the economy lost 33,000 jobs in September, the first monthly decline in employment in seven years, the government reported on Friday.
· But economists discounted the discouraging report, describing it as a blip in a job market that was fundamentally strong.
Some of the good news released by the Labor Department — a drop in the jobless rate to 4.2 percent and a year-over-year gain in wage growth of 2.9 percent — may also have been skewed by weather disruptions.
· President Trump called attention this week to the economy’s successes, writing on Twitter on Thursday, “Stock Market hits an ALL-TIME high! Unemployment lowest in 16 years!” Last week, Mr. Trump said that the Republicans’ proposed tax cuts would provide further “rocket fuel for our economy.”
· Fed must hike rates in face of hot U.S. labor market: Rosengren
The Federal Reserve must respond to “very tight” U.S. labor markets by gradually raising interest rates or risk halting the economic recovery, a hawkish Fed official said on Saturday.
In prepared remarks that largely restated his views, Boston Fed President Eric Rosengren said he expects the labor market to improve further after U.S. unemployment dropped to 4.2 percent last month, its lowest level since 2001.
· Fed's Dudley expects rate hikes; unmoved by inflation, storm effects
· Surprisingly low inflation and a trio of hurricanes that will muddle U.S. economic data have not dissuaded one of the Federal Reserve’s most influential policymakers from expecting the central bank to continue gradually raising interest rates.
New York Fed President William Dudley on Friday largely restated his confident take on the U.S. economy, arguing that the falling dollar and an unemployment rate that dipped last month to its lowest level since 2001were reasons to keep tightening monetary policy.
“Even though inflation is currently somewhat below our longer-run objective, I judge that it is still appropriate to continue to remove monetary policy accommodation gradually,” he said in prepared remarks for a speech at a conference in Brooklyn.
· Fed's Bullard concerned 'policy mistake' could hamper Fed goals
St. Louis Federal Reserve bank President James Bullard said he is increasingly concerned that his colleagues’ “zeal” to raise interest rates despite weak inflation amounts to a policy mistake that harm progress toward the Fed’s targets.
· North Korea is preparing to test a long-range missile which it believes can reach the west coast of the United States, a Russian lawmaker just returned from a visit to Pyongyang was quoted as saying on Friday.
“As far as we understand, they intend to launch one more long-range missile in the near future. And in general, their mood is rather belligerent.”
Morozov’s comments drove up the price of U.S. Treasury bonds, as investors, worried about the prospect of new North Korean missile tests, moved into assets the market views as a safe haven in times of uncertainty.
· U.S. President Donald Trump on Saturday said “only one thing will work” in dealing with North Korea after previous administrations had talked to Pyongyang without results.
Trump did not make clear to what he was referring, but his comments seemed to be a further suggestion that military action was on his mind.
· U.S. President Donald Trump said on Saturday he would be open to cutting a one-year or two-year deal with Democratic rivals as a way to kick-start reform of the nation’s healthcare system, a key campaign pledge made by Trump and the Republican Party.
· Catalonia’s moves to seek independence from Spain could unleash a new euro crisis, Manfred Weber, head of the conservative bloc in the European Parliament, said in an interview published on Saturday.
Weber told the German newspaper Bild the issue could lead to “European wildfire”, adding: “A new euro crisis also cannot be excluded if the Catalonian regional government continues to escalate the conflict.”
Weber called for urgent negotiations between the two sides.
· Tokyo Governor Yuriko Koike said on Sunday her new party aims to offer voters a “middle of the fairway” choice, seeking to differentiate her group from ruling, conservative Liberal Democratic Party and smaller, left-leaning opposition parties.
· Oil futures fell more than 2 percent on Friday, ending Brent crude’s longest multi-week rally in 16 months as oversupply concerns reappeared as producers have started hedging future drilling.
Brent futures LCOc1 settled down 2.4 percent, or $1.38 a barrel, to $55.62, snapping a five-week winning streak that was the longest since June 2016. For the week, Brent lost 3.3 percent.
U.S. West Texas Intermediate (WTI) crude CLc1 dropped $1.50 to $49.29, a 3 percent decline, putting losses on the week at 4.6 percent.
Reference: Reuters, CNBC, New York Time
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