Bitcoin Retreats, Trade Gap Narrows, Jobless Claims Spike Markets on Edge

Economic

Summary:

Bitcoin slid below $90,000, U.S. jobless claims saw their sharpest rise since 2020, and the trade deficit narrowed to its lowest level in over five years, reflecting both market fragility and economic complexity....

Bitcoin Below $90K Amid AI-Induced Risk Aversion

Bitcoin fell 2.5% to $90,056.24, breaking below the psychological $90,000 mark as market sentiment soured following disappointing AI-related earnings from Oracle. Investors were rattled by signs that soaring infrastructure spending in the AI sector hasn’t yet translated into profits, dampening broader appetite for risk assets. Ether also dropped 4.3% to $3,196.62.

The pullback came despite otherwise resilient equity markets, highlighting a growing divergence between crypto and traditional risk assets. Analysts noted that crypto markets are still digesting the October 10 selloff and remain hesitant. Standard Chartered, adjusting to new macro conditions, slashed its 2025 year-end Bitcoin forecast from $200,000 to $100,000, citing a likely end to corporate treasury buying and emphasizing that future growth will now depend mainly on ETF inflows.

Economic Surprise: U.S. Trade Deficit Narrows Sharply

Contrary to expectations of a widening gap, the U.S. trade deficit shrank by 10.9% in September to $52.8 billion its smallest level since June 2020. This significant drop, well below the forecasted $63.3 billion, was driven by a 3% jump in exports (to $289.3 billion), particularly a 4.9% surge in goods exports to a record $187.6 billion. Imports rose only 0.6%.

This suggests trade may have added to Q3 GDP growth. Before the release, the Atlanta Fed projected Q3 GDP at 3.5%. The U.S. government will publish the official estimate on December 23. This narrowing comes despite trade volatility caused by President Trump’s continued protectionist policies and tariff-driven distortions.

Labor Market: Jobless Claims Surge, But Analysts Warn Not to Panic

Initial jobless claims jumped by 44,000 to 236,000 in the week ended Dec. 6 the biggest weekly increase since March 2020. However, economists caution this figure may be skewed by holiday volatility. The previous week had seen the lowest claims in three years due to Thanksgiving-related timing.

Unadjusted claims rose nearly 115,000, with increases concentrated in California, Texas, Illinois, and New York. Despite this spike, the four-week moving average a more stable indicator rose only modestly to 216,750, still within the historical norms of a stable labor market.

Some analysts, like Pantheon Macroeconomics, interpret the rise as a sign of increasing layoffs, while others, such as High Frequency Economics, see it as seasonal noise. Major employers like PepsiCo and HP have recently announced job cuts, contributing to broader concerns about labor market softening. However, Navy Federal’s chief economist advises caution: “Smoothing it out, this still looks like an economy averaging 215,000 to 220,000 new jobless claims a week. That’s not a cause for concern.”

Market Sentiment: Risk Off Prevails Despite Mixed Signals

The disconnect between crypto and equities, the labor market's erratic signals, and narrowing trade deficit data reflect a complex macroeconomic picture. While Fed Chair Jerome Powell described the labor market as “gradually cooling” and highlighted downside risks in job creation, the central bank did not revise its unemployment forecasts for 2026.

With crypto sentiment fragile, AI profits uncertain, and recession fears still lingering under the surface of stronger trade numbers, investors are navigating choppy waters heading into 2026.

Remain cautious with crypto. If Bitcoin fails to recover above $92,000 in the near term, it may test stronger support around $86,500–$87,000. On the macro side, a narrower trade deficit and resilient consumer demand may support the USD, especially if labor market fears are overblown.

Source: Reuters

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Adam

Economic

There is a growing divergence of views among FOMC members. Some remain dovish, favoring more rate cuts. Their argument is based on a belief that inflation will continue to move toward the 2% target and that the weakening labor market benefits from lower interest rates. On the other side of the aisle are hawkish views.

Unlike the doves, they are concerned that inflation could become entrenched at 3% or higher. They do not view the recent weakness in the labor market as overly concerning. The divergent opinions can result in mixed messages from the Fed. As a result, the market was expecting a “hawkish easing.” Was the tone of yesterday’s meeting hawkish, less dovish, or even more dovish?

As we share below, the Fed made very few edits to the prior statement. Given so little has changed, it’s hard to say the Fed has become hawkish. Moreover, as we circle below on the left side, the Fed will begin purchasing Treasury Bills to expand its balance sheet by $40 billion a month and provide the markets with liquidity.

Despite what they may or may not call it, it’s QE. QE is dovish. Given that they stopped QT on December 1 and restarted QE, we would have to characterize the statement as more dovish. Yesterday’s policy change was undoubtedly not a hawkish cut as many expected.

During the press conference, Chairman Powell alluded to the labor market continuing to weaken and his belief that excess inflation is mainly due to tariffs. In fact, he claims inflation would be near 2% if not for the temporary impact of tariffs. His message appears slightly more dovish than at the previous meeting.

Based on the statement, QE, the press conference, and the Summary of Economic Projections (SEP) discussed below, we characterize the Fed’s policy stance as more dovish. It’s worth noting that there were three dissenting votes: one in favor of cutting by 50 bps and two hawkish votes in favor of keeping rates unchanged.

Fed’s Summary Of Economic Projections (SEP)

On a quarterly basis, the FOMC polls its members for forecasts on where GDP, unemployment, inflation, and the Fed Funds rate will be at the end of the current year, as well as the following three years and the “longer run.” The SEP is also referred to as the Fed dot plots, as each member’s projection is plotted on a scatter plot, as we share in the second graphic.

Of note:

The forecast for GDP growth next year rose sharply from 1.8% to 2.3%

PCE and Core PCE inflation were lowered by one and two-tenths, respectively, for 2026.

The Fed thinks inflation will fall back to its 2% target by 2027.

They forecast that unemployment has potentially peaked at 4.5% and will inch down over the next year.

Fed members are only expecting to cut rates once next year on average. However, the range of expectations is extensive, ranging from 2.1% to 3.9%.

Longer-run GDP forecasts have remained at 1.8% for quite a while despite AI and the massive data center expansion. The Fed must not think that AI and productivity gains will benefit the economy.

Source: investing

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Gerik

Economic

Exports Surge While Imports Stay Flat, Boosting Trade Balance

In a surprise development, the U.S. trade deficit narrowed significantly in September, defying forecasts of an increase. The monthly gap in goods and services fell to $52.8 billion, compared to $59.3 billion in August, marking a five-year low. Economists surveyed by Reuters had predicted a widening to $63.3 billion, making the actual data a major upside surprise.

This improvement was driven by a robust 3.0% rise in total exports, which climbed to $289.3 billion. Within that, goods exports jumped by 4.9% to $187.6 billion a gain propelled by record-breaking shipments of consumer goods. On the import side, growth was subdued at 0.6%, reaching $342.1 billion, as demand for foreign automobiles and parts weakened. Notably, imports of vehicles, parts, and engines dropped to their lowest level since November 2022, signaling possible supply-side adjustments or waning domestic demand in that segment.

The goods trade deficit narrowed to $79.0 billion, its smallest reading since September 2020, reinforcing the overall improvement in the U.S. external balance.

Trade Rebounds from Earlier GDP Drag

Earlier in the year, trade was a drag on economic growth. In the first quarter of 2025, net exports subtracted a record 4.68 percentage points from GDP due to volatile trade flows driven by tariffs and geopolitical frictions. However, this trend reversed in the second quarter, with trade contributing positively, and the September data now suggests that trend likely continued into the third quarter.

Prior to this trade release, the Atlanta Federal Reserve projected Q3 GDP growth at an annualized 3.5%. With the sharp contraction in the trade deficit, this estimate may be revised upward, especially if October data confirms ongoing strength in exports. The first official estimate of Q3 GDP will be released on December 23, following delays caused by a 43-day government shutdown.

Protectionist Trade Policies Continue to Skew Economic Signals

President Donald Trump’s tariff-heavy trade strategy has continued to inject volatility into U.S. trade statistics. While tariffs initially led to reduced imports, they also created supply chain distortions, retaliatory duties, and shifted trading patterns all of which have at times muddied the underlying health of the trade balance.

September’s narrowing trade gap may reflect both short-term gains from U.S. export competitiveness and strategic shifts by exporters to exploit tariff-exempt windows or rerouted global demand. However, the sustainability of such surpluses remains uncertain, particularly if global demand slows or retaliation intensifies.

A Strong Trade Report Adds Momentum to Q3 Growth

The unexpected contraction of the U.S. trade deficit in September marks a rare piece of good news for policymakers and investors alike. With consumer goods exports hitting record highs and automotive imports declining, the trade sector provided a clear lift to the economy in Q3.

While part of this shift may be transitory or policy-driven, it underscores the positive correlation between trade balance improvements and headline GDP growth. Whether this trend continues into 2026 will depend on evolving trade relations, global demand, and domestic manufacturing competitiveness. For now, the September data provides an encouraging sign of resilience in U.S. external trade performance.

Source: Reuters

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James Whitman

Commodity

Economic

World oil supply will match demand closely in 2026, OPEC data published on Thursday indicated, an outlook contrasting with projections from the International Energy Agency and others of a huge glut.

The OPEC+ group comprising the Organization of the Petroleum Exporting Countries, Russia and other allies plans to pause production hikes in the first quarter of 2026, amid widespread predictions of oversupply.

In a monthly report on Thursday, OPEC said that OPEC+ pumped 43.06 million barrels per day of crude in November, up 43,000 bpd from the previous month, as the latest output hike agreement took effect.

The report forecast demand for OPEC+ crude will average 43 million bpd in 2026, unchanged from last month and close to what OPEC+ produced in November. OPEC forecast demand for its crude at 42.6 million bpd in the first quarter.

Should OPEC+ keep pumping at November's rate in 2026 and other things remain equal, production would be 60,000 bpd higher than demand, according to a Reuters calculation based on the OPEC report.

This contrasts with the view of the IEA, which earlier on Thursday implied global oil supply will exceed demand by almost 3.84 million bpd - an amount equal to almost 4% of world demand - next year.

In its report, OPEC also kept its forecasts for 2025 and 2026 world oil demand growth unchanged and said the world economy remained on a solid footing.

Source: Reuters

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James Whitman

Economic

Canada recorded a merchandise trade surplus in September, the first time since January, as exports rebounded sharply while imports declined.

The trade in goods balance shifted from a deficit of $6.4 billion in August to a surplus of $0.2 billion in September, according to Statistics Canada data. Total exports of goods increased 6.3% to $64.2 billion, while total imports of goods decreased 4.1% to $64.1 billion.

When combined with services, Canada's overall trade balance amounted to a surplus of $0.3 billion in September.

The monthly international trade in services surplus remained essentially unchanged from the previous month at $0.2 billion. Imports of services rose 0.8% to $19.8 billion, while exports of services increased 0.7% to $20.0 billion.

Commercial services were the main driver of changes in both imports and exports. Imports of commercial services rose 2.4% to $11.6 billion, primarily due to an increase in financial services. This overall increase was partially offset by decreases in imports of travel services, which fell 1.9% to $4.9 billion, and transportation services, which declined 0.8% to $3.3 billion.

On the export side, commercial services climbed 0.9% to $12.2 billion. Exports of travel services increased 0.7% to $5.8 billion, mostly due to higher spending in Canada by travelers from the United States. Transportation service exports remained essentially unchanged at $1.9 billion.

"There's plenty more hurdles still for Canadian trade to pass, given continued US tariffs and CUSMA renegotiations looming," cautioned CIBC economist Andrew Grantham. "Q3's rebound was partly a result of second quarter trade flows falling lower than the underlying trend due to tariff front running in the first quarter. As a result, it wouldn't be a surprise if export performance weakened again during the fourth quarter, before seeing a more sustainable recovery during 2026."

Source: Investing

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Adam

Commodity

Market Overview

WTI crude retreated toward $58 per barrel on Thursday as shifting geopolitical tensions eased earlier supply concerns. Reports suggesting renewed energy flows into Europe reduced fears of prolonged disruptions, while rising OPEC+ production and soft demand expectations added to a bearish market backdrop.

Traders now await updated OPEC and IEA outlooks for clarity on the evolving supply–demand balance. Meanwhile, US data showed a 1.8 million-barrel draw in crude inventories, offset by rising Cushing stocks, which remain at their lowest seasonal levels since 2007.

The combination of geopolitical recalibration and oversupply risks continues to anchor near-term energy market sentiment.

Natural Gas Price Forecast

Natural Gas (NG) Price Chart

Natural Gas is trading near $4.56, extending its pullback after breaking below the long-term ascending trendline that supported the multi-week rally. Price is now struggling beneath $4.69, where recent candles show repeated rejection, confirming this level as short-term resistance. The 20-EMA and 50-EMA are both sloping downward, keeping momentum tilted bearish.

If sellers maintain pressure, support sits at $4.39, followed by $4.27 and the deeper zone at $4.13, all previous reaction areas from earlier consolidation phases. A break below $4.39 would confirm continued trend weakness.

If buyers attempt recovery, they must reclaim $4.69 and close above the broken trendline to shift momentum. As long as Natural Gas stays under $4.69, the bias favors further downside.

WTI Oil Price Forecast

Natural Gas (NG) Price Chart

WTI Crude Oil is trading near $58.18, slipping back after failing to break the descending trendline drawn from last week’s high. Recent candles show repeated rejection around $58.56, confirming it as near-term resistance. Price remains below both the 20-EMA and 50-EMA on the 2-hour chart, keeping momentum tilted lower.

Support sits at $57.68, where price has reacted several times. A clean break below this level opens the door toward $57.12, the next major support. If buyers attempt a bounce, the descending trendline and $58.56 will act as barriers to any recovery.

Brent Oil Price Forecast

Brent Price Chart

Brent crude is trading near $61.85, pulling back after another rejection from the descending trendline that has capped upside since last week. Price remains below the 20-EMA and 50-EMA on the 2-hour chart, keeping short-term pressure tilted lower. Candlesticks show repeated failures around $62.67, confirming it as strong resistance.

If sellers maintain control, support sits at $61.60, followed by $61.30, which aligns with prior reaction lows. A break under these levels opens room toward $60.98 and $60.52. The RSI is soft and trending below mid-levels, signaling limited buying strength. If Brent attempts a rebound, the descending trendline and $62.67 will be the first barriers bulls must reclaim to shift momentum.

Source: fxempire

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Justin

Economic

The U.S. trade deficit unexpectedly narrowed in September, touching the lowest level in more than five years, as exports accelerated and imports rose marginally, suggesting that trade likely provided a boost to economic growth in the third quarter.

The trade gap contracted 10.9% to $52.8 billion, the lowest level since June 2020, the Commerce Department's Bureau of Economic Analysis and Census Bureau said on Thursday.

Economists polled by Reuters had forecast the trade deficit increasing to $63.3 billion. The report was delayed because of the 43-day shutdown of the government.

Exports climbed 3.0% to $289.3 billion in September. Goods exports surged 4.9% to $187.6 billion, with shipments of consumer goods increasing to a record high.

Imports rose 0.6% to $342.1 billion. Goods imports advanced 0.6% to $266.6 billion. But imports of automotive vehicles, parts and engines were the lowest since November 2022.

The goods trade deficit compressed 8.2% to $79.0 billion, the lowest level since September 2020.

President Donald Trump's protectionist trade policy, marked by sweeping tariffs, has caused big swings in the trade deficit, distorting the overall economic picture.

Trade sliced off a record 4.68 percentage points from gross domestic product in the first quarter before adding all that back to GDP in the April-June quarter.

Prior to the trade data, the Atlanta Federal Reserve estimated GDP increased at a 3.5% annualized rate in the third quarter. The government will release its first estimate of third-quarter GDP on December 23 after it was delayed by the longest shutdown in history.

The economy grew at a 3.8% pace in the April-June quarter.