The Labour Department reported that new unemployment benefit claims reached a 10-month high in May while producer prices in May fell below expectations, raising hopes for a Federal Reserve interest rate cut in September despite the Fed's changing forecast in its latest meeting. The unemployment rate increased to 4% in May, but Fed Chair Jerome Powell said labour market conditions are back to pre-pandemic levels, while Treasury Secretary Janet Yellen sees the job market as more normal now, with slower wage growth and higher labour force participation. A deeper dive into the data shows that it was driven by lower energy costs and a drop in wholesale gasoline prices, while service costs remained unchanged.


The U.S. stock markets continued their record-breaking streak, while Asian stocks fell as the U.S. inflation-driven rally wound down, with Chinese markets hit hardest after the European Union applied up to 38% tariffs on major electric vehicle makers. Tesla is up 3% after shareholders approved Elon Musk's $56 billion pay package and the company's relocation to Texas after a Delaware court initially blocked the pay package.


The gold market has gone through strong volatility in response to the producer price index and jobless claims. The Fed's updated interest rate projections strongly resisted the dollar weakness suggested by the unexpected fall in U.S. producer prices in May. The market's reaction to these developments has been mixed, with traders currently seeing a 60% probability of a rate cut in September.


Oil prices snapped on Thursday but were on track for their best week in over two months, with both Brent and WTI crude futures gaining more than 3%. This trend was supported by solid projections for crude and fuel demand, with OPEC maintaining its forecast for relatively strong growth in global oil demand for 2024, while Goldman Sachs doubled down on U.S. fuel demand for the upcoming summer. Additionally, Russia pledged to meet its output obligations under the OPEC+ agreement after exceeding its quota in May.


The U.S. dollar gained on the Fed's hawkish stance after its recent meeting with an updated forecast of only one interest rate cut this year, pushing out the start of rate cuts to possibly December. This contrasts with other major central banks that have already begun easing, leading to policy divergence that supports the dollar. The Bank of Japan maintained its current bond-buying pace but announced plans to start trimming purchases in the future.