China trade could disrupt market calm

The volatility that scarred global markets last week is giving way to a greater degree of calm early this week, and traders go into Tuesday’s session in Asia looking to claw back some recent losses before assessing their next move.

Although risk appetite rebounded and volatility sank back notably on Monday, there was little change in US interest rate futures’ pricing of the Fed’s expected easing path – still nearly 250 basis points of rate cuts by the end of next year, reflecting significant concerns over the growth outlook.

But with US inflation figures due out on Wednesday, investors may be reluctant to push too hard in either direction over the next 36 hours. Asian markets on Tuesday could take their cue from local drivers.

Economic data releases include Malaysian industrial output, Indonesian retail sales, and Australia consumer sentiment and business confidence, while the yen’s upward momentum has stalled and a move back below 143.00 per dollar now looms.

The most important trigger for markets in Asian hours on Tuesday could be Chinese trade data for August, and the bar of expectation has been set low.

Exports likely rose 6.5% year-on-year by value, down from July’s 7.0% growth and the slowest pace in four months, while imports are expected to have grown just 2%, compared with 7.2% in July, according to a Reuters poll of economists.

Weakening export activity amid fears of mounting trade barriers and tariffs would be alarming in itself, but tepid import growth also reflects weak domestic demand. Together, they speak to an economy struggling to generate solid, sustainable growth.

Then there’s the cloud of deflation that refuses to lift.

Figures on Monday showed that consumer inflation ticked up in August to the fastest pace in six months, but the rise was due more to higher food costs from weather disruptions than a recovery in domestic demand. The 0.6% annual rate was still lower than forecasts.

More worrying, producer price deflation intensified. The producer price index in August slid 1.8% from a year earlier, the largest fall in four months, worse than July’s 0.8% decline and below economists’ consensus forecast of a 1.4% fall.

Factory gate prices have been in outright deflation for two years, a key reason why consumer price inflation is unlikely to accelerate much any time soon.

Meanwhile, Taiwan’s TSMC, the world’s largest contract chipmaker, will announce its monthly sales figures for August. Sales in June totaled T$207.87 billion, and rose to T$256.95 billion in July.

Taiwan firms like TSMC are major supplier to Apple AAPL.O, Nvidia NVDA.O and other tech giants. Their growth helped drive Taiwan’s August exports to an all-time monthly high of nearly $44 billion, as growing demand for chips to supply the AI industry offset anemic demand from China.
Here are key developments that could provide more direction to Asian markets on Tuesday:
– China trade (August)
– TSMC sales figures (August)
– Australia consumer confidence (September)

(Reporting by Jamie McGeever; Editing by Bill Berkrot)

Dollar rises after August US payrolls report paints mixed picture

NEW YORK – The dollar rose in volatile trading on Friday after data showed US employment grew less than expected in August, but indicated only a steady slowdown in the labor market, likely supporting gradual interest rate cuts by the Federal Reserve.

Nonfarm payrolls increased by 142,000 jobs last month after a downwardly revised 89,000 rise in July, the Labor Department’s Bureau of Labor Statistics said on Friday. Economists polled by Reuters had forecast payrolls increasing by 160,000 jobs after a previously reported 114,000 gain in July.

The dollar, which initially fell against most major peers after the release of the jobs data, soon recovered ground to trade higher. The US currency, a traditional safe haven, also found support as stocks and other risky assets sold off on Friday.

The euro was 0.3% lower against the dollar at USD1.108225, jumping as high as USD1.1155 right after the release of the payrolls report. The Dollar Index, which measures the US currency’s strength against six major peers, was up 0.2% at 101.21.

“I think the market’s really struggling with this one because it’s really in the middle of what could be used as a justification for either a 25 or 50 basis point rate cut,” Gennadiy Goldberg, head of US rates strategy at TD Securities, said.

Traders now see a 31% chance that the Fed will cut its policy rate, now in the 5.25% to 5.50% range, to a 4.75% to 5% range at its upcoming meeting on Sept 17-18, according to LSEG data. Before the report they had seen about a 43% chance of that outcome, favoring instead a quarter-point reduction.

“The US economy looks more likely to gouge the runway in the months ahead, justifying an increasingly aggressive response from officials at the Federal Reserve,” said Karl Schamotta, chief market strategist at payments company Corpay in Toronto.

“A half-point rate cut at the central bank’s September meeting remains unlikely, but today’s release provided clear evidence of a sharp deterioration in labor market fundamentals, and will bolster bets on at least one jumbo-sized rate cut in the coming months,” he said.

Against the Japanese yen, the dollar fell 0.7% to 142.42 yen, on pace for a fourth straight session of losses.

Safe haven demand and expectations for imminent rate hikes from the Bank of Japan have helped support the Japanese currency in recent sessions.

Traders have sold the dollar against other currencies fairly consistently over the last couple of months, as concern has risen that a slowing US economy will require chunky rate cuts.

Federal Reserve policymakers on Friday hinted they are ready to kick off a series of interest rate cuts at the US central bank’s meeting in two weeks, noting a cooling in the labor market that could accelerate into something more dire in the absence of a policy shift.

Fed Chair Jerome Powell signaled that the central bank’s focus was shifting from fighting inflation to preventing deterioration in the job market when he strongly endorsed an imminent start to the monetary easing cycle at the annual economic conference in Jackson Hole last month.

The pound was about 0.4% lower at USD1.3131.

The Bank of England meets in two weeks to set monetary policy. Right now, the derivatives market shows traders see very little chance of a rate cut this month, but a quarter-point cut is fully priced in for November.

In cryptocurrencies, bitcoin fell about 4% to a fresh 1-month low of USD53,600, as investors avoided riskier assets.

(Reporting by Saqib Iqbal Ahmed; Additional reporting by Karen Brettell and Kevin Buckland; Editing by Shri Navaratnam, Kim Coghill, Andrew Heavens, Mark Heinrich, Jonathan Oatis, and Diane Craft)

Economic worries back on Wall Street’s radar after jobs data

NEW YORK – Uncertainty over the US economy’s health is rippling through markets, adding fuel to an already-volatile period that has investors grappling with a shift in Federal Reserve policy, a tight US election, and worries over stretched valuations.

US stocks tumbled on Friday after closely watched jobs data showed labor market momentum slowing more than expected, suggesting a narrower path for the US to achieve a soft landing, in which the Fed is able to cool inflation without badly damaging economic growth.

The Fed is expected to cut interest rates at its Sept. 17-18 meeting, but the data revived fears that months of elevated borrowing costs have already started to pressure the economy. That is a potentially unwelcome development for investors, after prospects for rate cuts against a background of resilient growth helped drive the S&P 500 to record highs this year.

“The data shows that we remain on the soft-landing path, but clearly there’s more downside risks to which the markets are going to be sensitive,” said Angelo Kourkafas, senior investment strategist at Edward Jones. “The expectation for elevated volatility is a realistic one.”

Evidence of ebbing risk appetite showed up across markets. The S&P 500 dropped 1.7%, with major declines in technology and growth stocks, among the market’s biggest winners this year. Nvidia NVDA.O, the poster child of this year’s artificial intelligence excitement, was recently down over 4% and fell to its lowest level in about a month.

Meanwhile, the Cboe Market Volatility index, also called Wall Street’s “fear gauge,” hit its highest level in nearly a month on Friday.

Several factors threaten to compound the market’s uncertainty. Though futures bets on how much the Fed will cut rates later this month showed investors pricing in a nearly 75% chance of a 25 basis point reduction, the issue remains far from settled.

“Markets have had to grapple with – just as the Fed is doing – whether the August payroll data reflects a labor market normalizing towards pre-COVID levels or whether it’s indicative of an economy losing dangerous momentum,” Quincy Krosby, chief global strategist for LPL Financial, said in written commentary.

Others took a dimmer view. Citi analysts said the report warranted a 50 basis point cut later this month.

“The takeaway from the range of labor market data is clear – the job market is cooling in a classic pattern that precedes recession,” analysts at Citi wrote.

Inflation data next week could shed further light on the strength of the economy and help solidify bets on how much the Fed might cut rates.

Valuation concerns are also reemerging. The S&P 500, which is up over 13% this year, is trading at a price-to-earnings ratio of nearly 21 times expected forward 12-month earnings estimates as of Thursday, well above its historical average of 15.7, according to LSEG Datastream.

Despite a recent swoon, the S&P 500 technology sector – by far the biggest group in the index – is trading at over 28 times expected earnings, compared to its long-term average of 21.2.

“We’ve come a long way in a relatively short period of time and I think you’re starting to see some businesses do the math on AI and ask whether it’s really worth the cost, which will weigh on the big tech stocks,” said Mark Travis, a portfolio manager at Intrepid Capital Management.

Investors are also closely watching a tight US presidential election which is starting to head into the home stretch. The race between Democrat Kamala Harris and Republican Donald Trump could draw more investor focus on Tuesday, when the two candidates debate for the first time ahead of the Nov. 5 vote.

So far, the market gyrations have bolstered September’s reputation as a tough time for investors. The S&P 500 has fallen an average of nearly 0.8% in September since 1945, making it the worst month for stocks, CFRA data showed. The index is already down 4% since the month began.

“Investors are saying let’s hope we can have a soft landing,” said Burns McKinney, senior portfolio manager at NFJ Investment Group. “It still feels like it’s fairly likely, but with each weaker jobs number it’s becoming less and less the base case.”

(Reporting by Lewis Krauskopf; Editing by Ira Iosebashvili and Richard Chang)

US equity funds see major outflows on growth concerns

US equity funds experienced their largest weekly outflow in 12 weeks by Sept. 4, driven by heightened investor anxiety about the economic outlook as they awaited crucial labor market data.

According to LSEG data, investors disposed of a net USD 11.73 billion worth of US equity funds during the week, registering a fourth weekly outflow in five weeks.

A lackluster US manufacturing report on Tuesday reignited investor concerns about economic growth, ahead of the crucial non-farm payrolls report due at 8:30 a.m. ET (1230 GMT). This upcoming report could provide further insights into the economic situation and influence the potential magnitude of an interest rate cut this month.

By segment, US large-cap funds observed a weekly net sale of USD 4.28 billion, the biggest in three weeks. Small-cap, mid-cap and multi-cap funds also posted outflows, valued at USD 1.77 billion, USD 1.34 billion and USD 667 million, respectively.

The technology sector faced about USD 879 million worth of net sales, the biggest weekly outflow in six weeks. Investors, meanwhile, bought financial sector funds for the fourth successive week, worth about USD 418 million.

Investors, meanwhile, funneled a net USD 45.81 billion worth of investments into the safety of US money market funds, extending their purchases into a fifth consecutive week.

US bond funds, meanwhile, attracted inflows for the 14th week in a row, recorded at USD 2.23 billion on a net basis.

US short-to-intermediate investment-grade, general domestic taxable fixed income, and municipal debt funds saw significant purchases, worth about USD 3.28 billion, USD 2.03 billion, and USD 963 million, respectively.

Short-to-intermediate government & treasury funds, meanwhile, witnessed about USD 5.53 billion worth of net selling, reversing a net USD 4.84 billion worth of inflow in the prior week.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by David Evans)

Oil settles down 2%, big weekly drop after US jobs data

NEW YORK – Oil prices settled 2% lower on Friday, with a big weekly loss after data US jobs data was weaker than expected in August, which outweighed price support from a delay to supply increases by OPEC+ producers.

Brent crude futures were down USD 1.63, or 2.24%, to USD 71.06 a barrel, their lowest level since Dec. 2021. US West Texas Intermediate crude futures fell USD 1.48, or 2.14%, to USD 67.67, their lowest since June 2023.

For the week, Brent declined 10%, while WTI dropped around 8%.

US government data showed employment increased less than expected in August, but a drop in the jobless rate to 4.2% suggested an orderly labor market slowdown that may not warrant a big interest rate cut from the Federal Reserve this month.

“The jobs report was a little soft and implied that the economy in the US is on the slide,” Bob Yawger, executive director of energy futures at Mizuho.

Concerns around Chinese demand also kept pressuring oil prices, Yawger said.

On Thursday, Brent settled at its lowest since June 2023 despite a withdrawal from US oil inventories and a decision by OPEC+ to delay planned oil output increases.

US crude stockpiles fell by 6.9 million barrels to 418.3 million barrels last week, compared with a projected decline of 993,000 barrels in a Reuters poll of analysts.

Signals that Libya’s rival factions could be closer to an agreement to end the dispute that has halted the country’s crude exports also pressured oil prices this week. Exports remained mostly shut in but some loadings have been permitted from storage.

Bank of America lowered its Brent price forecast for the second half of 2024 to USD 75 a barrel from almost USD 90 previously, it said in a note on Friday, citing building global inventories, weaker demand growth, and OPEC+ spare production capacity.

The US active oil rig count, an early indicator of future output, remained unchanged at 483 this week, energy services firm Baker Hughes BKR.O reported on Friday.

Money managers cut their net long US crude futures and options positions in the week to Sept. 3, the US Commodity Futures Trading Commission (CFTC) said on Friday.

(Reporting by Nicole Jao in New York, Robert Harvey in London and Colleen Howe in Beijing; Editing by David Goodman, Jason Neely, Sharon Singleton, Paul Simao, Alexander Smith, and David Gregorio)

Central banks lay liquidity trap for stock markets

LONDON – Less money, more problems. Central banks may have unwittingly contributed to the Aug. 5 “mini crash” in global equities by taking USD 200 billion of cash out of the global system in the preceding days. Ratesetters had reasons to do so, but the risk is that liquidity traps could ensnare markets again.

Bad US economic data and margin calls on debt-fuelled bets against the Japanese yen have taken the rap for a brief but sharp summer rout in world stock markets. But something else was going on in the background.

US Fed Chair Jay Powell and his peers use injections or withdrawals of “reserves” – or money they create – to control interest rates, meet banks’ needs for cash, and generally oil the wheels of global finance. Examples of these processes include the quantitative easing programs. They involve creating reserves, boosting the amount of money in the financial system. The reverse, and currently widespread, process known as quantitative tightening, involves destroying that liquidity.

The day before the Aug. 5 crash, central banks in the United States, Europe, Switzerland, Japan and China collectively yanked more than USD 200 billion from the financial system compared to the previous seven days, according to an analysis by Matt King of Satori Insights. Each central bank has different objectives, so the move was likely coincidental rather than coordinated. But the lack of liquidity may have deepened the plight of investors scrambling to raise cash for margin calls. At the very least, the episode underlines stock markets’ vulnerability to the otherwise arcane topic of central banks’ balance-sheet management.

Admittedly, it’s not a perfect relationship. Markets didn’t tank the last time ratesetters sucked an unusually large amount of cash out of the system, back in April. And a broader measure of liquidity compiled by CrossBorder Capital, which also includes private sector credit and bond markets, didn’t show any red flags in early August.

Still, two factors suggest the fragility may reoccur. The first is the size of central banks’ balance sheets, which have grown exponentially since the Fed and others rescued the financial system in the 2008 crisis. The Fed had USD 870 billion-worth of assets back then. It now holds USD 7.1 trillion. The second is investors’ herdlike penchant for following existing market trends. Over the past decade, this “momentum investing” style has been the world’s second-best performing strategy, according to MSCI. That has led to ever-more concentration in popular sector and stocks, which then magnifies losses when the trends reverse.

Since 2008, central banks have repeatedly come to the rescue amid market panics. Recent evidence suggests they may be causing them.

CONTEXT NEWS

The US Federal Reserve, the European Central Bank, the Swiss National Bank, the Bank of Japan and the People’s Bank of China, took more than USD 200 bln out of the global financial system on Aug. 4, according to calculations by Satori Insights. A day later, stock markets around the world plummeted, with Japan’s Topix index losing 12% in a single day, while the S&P 500 index closed down 3%.

(Editing by Liam Proud and Streisand Neto)

10-year yields fall to 15-month low, size of Fed rate cut in question

NEW YORK – Benchmark 10-year Treasury yields fell to a 15-month low on Friday before paring back in choppy trading as August’s payrolls report failed to offer a clear signal on the size of an expected Federal Reserve interest rate cut later this month.

Nonfarm payrolls increased by 142,000 jobs last month after a downwardly revised 89,000 rise in July. Economists polled by Reuters had forecast payrolls increasing by 160,000 jobs.

The unemployment rate fell to 4.2%, from 4.3% the prior month.

“The market’s really struggling with this one because it’s really in the middle of what could be used as a justification for either a 25 or 50 basis point rate cut,” said Gennadiy Goldberg, head of US rates strategy at TD Securities in New York.

US 10-year Treasury yields were last down 2.5 basis points at 3.708% and earlier fell as low as 3.648%, the lowest since June 2023.

Interest rate-sensitive two-year yields fell 10.6 basis points to 3.646% and reached 3.595%, the lowest since March 2023.

The closely watched yield curve between two- and 10-year notes was at 6 basis points, the steepest since July 2022.

The bond market is pricing in an aggressive path of rate cuts over the coming year and a half, even as many economists see the US avoiding a recession.

Fed funds futures traders are now pricing a 73% chance of a 25 basis point cut at the Fed’s Sept. 17-18 meeting, and a 27% chance of a 50 basis point reduction, according to the CME Group’s FedWatch Tool.

In total 251 basis points of cuts are priced in by the end of 2025.

““The payroll report suggests there is no reason for the Federal Reserve to rush,” said Drew Matus, chief market strategist at MetLife Investment Management in New Jersey. “The labor market is slowing, but at a slow pace, allowing the Fed to move more deliberately in September.”

Some of the underlying details of Friday’s report, including downward revisions of 86,000 jobs gains for the past two months, however, may be a warning that the labor market is not as healthy as hoped.

“We do see the labor market really not just coming into balance, but really starting to cool off quite significantly, which could make the Fed quite nervous,” said TD’s Goldberg.

Fed policymakers on Friday said they are ready to lower interest rates at the US central bank’s meeting in two weeks, with one of them saying he could support back-to-back reductions, or a bigger cut in borrowing costs, should the cooling labor market need support.

The Treasury next week will sell USD 119 billion in coupon-bearing supply, including USD 58 billion in three-year notes on Tuesday, USD 39 billion in 10-year notes on Wednesday and USD 22 billion in 30-year bonds.

(Reporting By Karen Brettell; Additional reporting by Sinéad Carew; Editing by Christina Fincher, Alex Richardson, Jonathan Oatis, and Deepa Babington)

Dollar eases ahead of US payrolls test

NEW YORK – The US dollar eased against most major currencies on Thursday in choppy trading as investors braced for Friday’s US payrolls report, which could shape the path of interest rate cuts from the Federal Reserve.

The dollar has come under pressure in recent sessions as signs of slowing growth in the US economy have lifted the chances of the Fed cutting rates with more urgency.

Fed Chair Jerome Powell last month endorsed an imminent start to interest rate cuts in a nod to concern over a softening in the labor market.

Data on Thursday showed the number of Americans filing new applications for jobless benefits declined last week as layoffs remained low.

The report helped allay fears that the labor market was deteriorating, after data released in the previous session showed US private jobs growth hitting a 3-1/2-years low in August.

Economists surveyed by Reuters expect an increase of 165,000 US jobs in August, up from a rise of 114,000 in July.

“There’s this looming sense that a downturn in the economy is coming, but these latest numbers don’t show that,” Adam Button, chief currency analyst, at Forexlive in Toronto, said.

“I think the market is flip-flopping between 25 and 50 basis points on every data point,” Button said.

Markets are pricing in a 59% chance of a 25 basis points cut when the Fed meets on Sept. 17 and 18, with a 41% probability of a 50 bps cut, the CME FedWatch tool showed. In all, some 100 bps of cuts are priced for the year.

The euro was 0.2% higher against the dollar at USD 1.1106, a one-week high. The Dollar Index, which measures the US currency’s strength against six major peers, was 0.2% lower at 101.08.

Against the Japanese yen, the dollar fell 0.3% to 143.35 yen, a one-month low. Safe haven demand and expectations for imminent rate hikes from the Bank of Japan have helped lift the Japanese currency in recent sessions.

The options market shows traders are preparing for potentially big moves in currencies on Friday. Overnight implied options volatility – a measure of demand for protection – is at its highest since the banking crisis of March 2023 for the euro and at its highest in a year for the yen.

The pound was 0.2% higher at USD 1.31715 on Thursday. The Bank of England meets in two weeks to set monetary policy. Right now, the derivatives market shows traders see very little chance of a rate cut this month, but a quarter-point cut is fully priced in for November.

The Australian dollar reversed earlier losses to trade up 0.1% on the day, drawing support from a still-hawkish Reserve Bank of Australia.

With investors avoiding riskier assets, cryptocurrencies slipped on Thursday. Bitcoin fell 2.6% to USD 56,510 and ether slipped about 2.8% to USD 2,387.

(Reporting by Laura Matthews in New York; Additional reporting by Amanda Cooper and Rae Wee in Singapore; Editing by Sharon Singleton, Alison Williams, Christina Fincher, and Jonathan Oatis)

Gold gains as investors anticipate super-sized Fed rate cut

Gold prices rose to near one-week highs on Thursday, on the back of a weaker US dollar and lower yields after signs of the labor market losing steam led investors to expect a super-sized rate cut from the Federal Reserve this month.

Spot gold was up 0.9% at USD 2,515.93 per ounce by 2:03 p.m. ET (1803 GMT), rising as much as 1.1% earlier in the session. Prices slightly pared gains after the US services sector data.

US gold futures settled 0.7% higher at USD 2,543.10.

US private employers hired the fewest number of workers in 3-1/2-years in August, potentially hinting at a sharp labor market slowdown. This follows data on Wednesday showing a sharp decline in US job openings in July.

After ADP data, there was a gold spike and it really shows “the labor market is in a dire state and there is a lot of concern about it,” said Phillip Streible, chief market strategist at Blue Line Futures.

“The initial claims data didn’t really help either as far as painting a rosy picture for the employment.”

Traders currently see a 59% chance of a 25-basis-point (bp) reduction by the US central bank this month and a 41% chance of a 50-bp cut, according to the CME FedWatch tool.

The Fed needs to cut interest rates to keep the labor market healthy, but it is now down to incoming economic data to determine by how much, San Francisco Fed President Mary Daly said on Wednesday.

Attention turns to the upcoming non-farm payrolls (NFP) report on Friday.

“If the August unemployment rate matches July’s 4.3%, its highest since 2021, that should send gold back towards its record high as markets ramp up bets for a jumbo-sized rate cut,” said Han Tan, chief market analyst at Exinity Group.

Elsewhere, spot silver gained 1.9% to USD 28.82, platinum climbed 2.7% to USD 926.74 and palladium rose 0.9% to USD 942.36.

(Reporting by Anushree Mukherjee and Daksh Grover in Bengaluru, additional reporting by Swati Verma; Editing by Krishna Chandra Eluri and Janane Venkatraman)

Yields fall as ADP jobs gains miss expectations

NEW YORK – US Treasury yields fell and interest rate-sensitive two-year yields reached a 15-month low on Thursday after ADP jobs data showed employers added fewer jobs than anticipated in August, before Friday’s government jobs report.

Private payrolls increased by 99,000 jobs, the smallest gain since January 2021, after rising by a downwardly revised 111,000 in July, the ADP National Employment Report showed.

Economists polled by Reuters had forecast private employment would advance by 145,000 positions.

The report was consistent with a still-solid labor market, said Thomas Simons, senior US economist at Jefferies in New York.

“When you look at slowing payroll growth, slowing job openings, slowing claims, and steady wage growth, that means that the labor market has settled into a better balance that is a good place for most workers,” Simons said.

“I don’t think that we are seeing the early stages of some sort of unraveling or rapid deterioration in the labor market, and unless we do, I still think that the market is pricing in way too much easing from the Fed, whether that be in terms of pace or total number of cuts,” he added.

Traders are pricing in a 41% probability of a 50 basis point cut at the Federal Reserve’s Sept. 17-18 meeting, and 59% odds of a 25 basis point reduction, according to the CME Group’s FedWatch Tool.

The US central bank is also expected to cut rates at each meeting through at least June, with 238 basis points of cuts priced in by the end of 2025.

Interest rate-sensitive two-year note yields were last down 1.6 basis points at 3.754% and earlier reached 3.713%, the lowest since May 2023. Benchmark 10-year note yields fell 3.2 basis points to 3.736% and got as low as 3.721%, the lowest since Aug. 4.

The yield curve between two- and 10-year yields was at minus 2 basis points, after turning positive on Wednesday for the first time since Aug. 5.

Yields have fallen as traders price in the possibility of a US recession even as many economists see the economy avoiding a downturn.

Friday’s jobs report is expected to show that employers added 160,000 jobs during August, up from 114,000 in July, according to the median estimate of economists polled by Reuters. The unemployment rate is anticipated to ease to 4.2%, from 4.3%.

“For the US recession narrative to re-emerge among economists a non-farm payrolls number perhaps below 125k would be needed along with an unemployment rate at 4.3% or higher,” JPMorgan analysts including Nikolaos Panigirtzoglou said in a report on Thursday.

Other data on Thursday showed that the number of Americans filing new applications for jobless benefits declined last week as layoffs remained low.

US services sector activity was also steady in August, though employment gains slowed.

(Reporting By Karen Brettell; Editing by Barbara Lewis and Jonathan Oatis)

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