Giving thanks for bad economic news

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Morning Bid U.S.

A Reuters Open Interest newsletter

What matters in U.S. and global markets today

By Anna Szymanski, Editor in Charge, Reuters Open Interest

Weaker-than-expected U.S. economic data has upped bets for a Federal Reserve interest rate cut next month, giving global equities a boost as we move into the Thanksgiving holiday. And while Americans are prepping turkeys or heading to the airport, Britain will be chewing over the details of its much-debated budget, which Rachel Reeves, the UK's finance minister, is releasing today.

For more on the UK budget, check out ROI editor-at-large Mike Dolan's latest column on why a rallying U.S. bond market may soften any negative market reaction over in gilts.

Also, check out Mike on the latest episode of the new Morning Bid daily podcast. Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week.

We'll be off for the Thanksgiving holiday, so look out for the next edition of Morning Bid on Monday.

Data refreshes every time you open this email. For more U.S. market news, click here. Please send any feedback to morningbid@thomsonreuters.com.

Today's Market Minute

The U.S.-backed 28-point peace plan to end the war in Ukraine, which became public last week, drew from a Russian-authored paper submitted to the Trump administration in October, according to three sources familiar with the matter.
British finance minister Rachel Reeves is likely to announce tens of billions of pounds of new tax increases on Wednesday in a budget that puts her credibility on the line both with bond investors and with lawmakers demanding more welfare spending.
U.S. tech companies' share of S&P 500 earnings has been slipping even as their contribution to the index's market value remains near multi-decade highs, raising concerns that their prices are further removed from underlying profit trends.
Europe's gas market is far calmer today after years of turmoil that saw the region swap Russian supplies for liquefied natural gas imports, a strategy that is unlikely to change even if President Donald Trump brokers a peace deal in Ukraine, writes ROI Energy Columnist Ron Bousso.
Reeves, who faces a make-or-break budget, should view her Labour government's deep unpopularity as a gift, writes Mike Peacock in his new column for ROI.

Giving thanks for bad news

U.S. stocks rose for the third consecutive day on Tuesday after data showed softer-than-expected retail sales and weakening consumer confidence.

Retail sales increased 0.2% in September after an unrevised 0.6% gain in August. Economists polled by Reuters had forecast retail sales would increase by 0.4%. The data was a bit stale, as the report was delayed by the 43-day U.S. government shutdown. But negative vibes were also evident in the latest Conference Board's consumer confidence index, which dropped to 88.7, the lowest level since April.

Take these soft economic data points, combine them with the recent rise in the unemployment rate to 4.4%, add dovish statements from multiple Fed officials, and you appear to have the makings of a December rate cut. Fed funds futures are pricing in a roughly 80% probability of a 25-basis-point cut at the meeting on December 10, compared to essentially a coin flip one week ago.

Over in the UK, Rachel Reeves is set to release the long-awaited autumn budget, which is expected to include new tax increases, as the ruling Labour government attempts to stay within its own fiscal rules and maintain the confidence of financial markets. Sterling was fairly steady early on Wednesday, after four days of gains ahead of the big budget reveal.

In Japan, the yen initially rallied against the U.S. dollar as sources told Reuters that the Bank of Japan is preparing markets for a possible interest rate hike as soon as next month. But those gains have since been pared back.

Finally, oil prices hovered in a narrow range early on Wednesday. Both Brent crude and WTI settled down 89 cents on Tuesday after Ukrainian President Volodymyr Zelenskiy told European leaders that he was ready to advance a U.S.-backed framework for ending the war with Russia, with only a few points of disagreement remaining. Ultimately, an expected supply glut will likely keep a lid on prices in the oil market, while the potential ceasefire deal could see the floor drop lower.

Graphics are produced by Reuters.

Today's key chart

Graphics are produced by Reuters.

Alphabet's shares rose about 1% on Tuesday after the Information reported Facebook-parent Meta was in discussions to use Google's AI chips in its data centers from 2027 and rent chips from Google Cloud by next year. The news sent the share price of Nvidia, currently the dominant AI chip firm, down more than 2% to a two-month low - a sign of growing competition and rivalry among the sector's megacaps who had previously all risen in tandem on the AI buzz.

Today's events to watch

UK autumn budget 2025
U.S. durable goods orders

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