Yields Edge Higher, UK Data Points to Stagnation (15-19 September)

Oil gained on renewed supply concerns from Russia, the euro strengthened on ECB signals, and UK data proved lingering growth challenges.

Consumer prices in the US rose slightly above forecasts while jobless claims hit a four-year high, fueling bets that the Federal Reserve will cut rates at its September meeting. This outlook kept the dollar under pressure, supported rallies in gold and silver, and lifted bond markets.

Currencies

US Dollar Index (DXY): The dollar index steadied near 97.6 on Friday but remained under pressure as inflation figures came in line with expectations, leaving the Federal Reserve room to ease policy amid a weakening labor market. Consumer prices rose 0.4% in August, slightly above forecasts, while the annual rate held steady at 2.9%. At the same time, jobless claims surged by 27K to 263K, the highest since 2021, underscoring labor market fragility. Markets are now pricing in a 93% probability of a 25-basis-point cut at the Fed’s September meeting, with some chance of a larger move.
Euro (EUR/USD): The euro climbed back above $1.17, buoyed by a hawkish tone from the European Central Bank and broad dollar weakness. Sentiment shifted after US data reinforced expectations of Fed cuts this year. By Friday, EUR/USD stabilized around 1.1720 after an intraday dip near 1.1700, supported further by weaker US consumer sentiment.
British Pound (GBP/USD): Sterling held close to $1.35, little changed from last week’s levels. UK GDP stagnated in July as forecast, but industrial production unexpectedly fell 0.9%, highlighting ongoing economic challenges. Rising taxes and tariffs are weighing on households and businesses, while markets await new fiscal measures expected from Chancellor Rachel Reeves in November.
Japanese Yen (USD/JPY): The yen weakened to 147.4 per dollar on Friday, surrendering prior session gains. A joint US–Japan statement reaffirmed that exchange rates should remain market-driven and that excessive volatility is undesirable. Japanese Finance Minister Katsunobu Kato emphasized the importance of this stance amid new US tariff measures, though specific levels were not discussed with US Treasury Secretary Scott Bessent.

Commodities

Gold (XAU/USD): Gold climbed toward $3,650 per ounce on Friday, nearing record highs and marking a fourth consecutive weekly gain. The metal drew strength from expectations of looser US monetary policy and ongoing safe-haven demand. Inflation figures remained steady, while jobless claims rose sharply, reinforcing the case for rate cuts at the Fed’s upcoming meeting.
Silver (XAG/USD): Silver rose 1% to approach $42 per ounce, reaching a new 14-year high. The rally followed firm expectations of Fed easing, alongside data showing consumer prices rising 0.4% in August and jobless claims hitting four-year highs. Traders are nearly fully pricing in a 25-basis-point cut, with speculation of a half-point move also circulating.
Brent Crude Oil: Brent futures settled at $67 a barrel on Friday, up 0.9% on the day and 2.3% on the week. Gains were fueled by renewed concerns over Russian crude supply disruptions. A drone attack at Russia’s Primorsk port and the suspension of peace talks with Ukraine increased geopolitical risks, offsetting demand concerns and IEA forecasts for stronger global supply growth.

Fixed Income

US 10-Year Treasury: Yields rose nearly 3bps to 4.06% on Friday, holding just above recent five-month lows. Investors grew more confident of a Fed rate cut next week, as CPI data aligned with expectations and jobless claims surged. Markets now anticipate a 25bps cut in September.
UK Gilts: The 10-year gilt yield slipped below 4.6%, the lowest in a month, following data showing stagnant GDP in July and weaker-than-expected industrial output. The trade deficit also widened slightly, with the soft data adding pressure to bond yields as investors assessed the fiscal and monetary outlook.
Japan 10-Year JGB: Japan’s 10-year government bond yield hovered near 1.59%, with investors balancing the Bank of Japan’s policy path against mixed economic data and heightened political uncertainty. Prime Minister Shigeru Ishiba announced his resignation amid internal party rifts and fallout from last year’s election defeat.
Germany 10-Year Bund: German yields edged toward 2.7% after the European Central Bank left rates unchanged. ECB President Christine Lagarde signaled that the rate-cutting cycle may have concluded, highlighting balanced growth risks. Projections now see eurozone GDP expanding 1.2% in 2025, easing to 1.0% in 2026, and steadying at 1.3% in 2027.

Key Economic Data

US Producer Price Index (PPI): The PPI for final demand slipped 0.1% in August, reversing a 0.7% increase in July. On an annual basis, the index rose 2.6%, marking a slowdown and hinting at softer inflationary pressures in the pipeline.
US Job Openings (August): Vacancies fell by 176K to 7.18 million, the lowest since September 2024. The largest declines were seen in health care/social assistance (-181K), arts/entertainment (-62K), and mining/logging (-13K). Regionally, openings fell sharply in the South and Northeast, while the West saw an increase of 113K.
Eurozone Interest Rate Decision: The ECB kept rates steady, with the deposit facility at 2.00%, the refinancing rate at 2.15%, and the lending rate at 2.40%. Inflation projections were revised slightly, with headline CPI expected at 2.1% in 2025, dipping to 1.7% in 2026, before edging higher to 1.9% in 2027.
US Core CPI (August): Core consumer prices, excluding food and energy, rose 0.3% in August and 3.1% over the past year. Headline CPI climbed 0.4% on the month, leaving the annual rate at 2.9%.
US CPI (August): Shelter costs rose 0.4%, food prices increased 0.5% (0.6% for groceries and 0.3% for dining out), and energy prices advanced 0.7%, with gasoline up 1.9%. These categories were the main drivers of the monthly increase.
German CPI (August): Germany’s inflation rate ticked up to 2.2% year-on-year, from 2.0% in June and July. Rising food prices contributed significantly to the increase, marking the first acceleration in consumer inflation this year.

Latest Analysis

Fed Faces Political and Internal Strains

The September 2025 Federal Open Market Committee (FOMC) meeting arrives under extraordinary circumstances.

Detail

Wall Street Hits Records on AI Optimism (15.09.2025)

Asian markets opened on a cautious note as traders awaited the Fed’s decision.

Detail