Markets Already Looking to NFP

Economic

Summary:

Markets await August NFP, with forecasts of 74k jobs and unemployment rising to 4.3%. Weak hiring, wage slowdown, and data revisions bolster Fed rate-cut expectations, though credibility concerns may spur volatility.

The August employment report is likely to confirm a cooling in labour demand and reinforce a dovish signal for the Federal Reserve. We expect nonfarm payrolls to rise by about 74k, with the unemployment rate increasing from 4.2% to 4.3%.

US unemployment rate

Lessons from July: data, revisions, and political pressure

Last month unsettled markets not only because payroll growth in July was weak at 73k, but also because May and June were revised down by a combined 258k. In response, President Donald Trump accused the Bureau of Labor Statistics of manipulation and dismissed its head the same day. He has nominated the chief economist of a conservative think tank as successor, but the appointment still requires Senate confirmation. This raises concerns about politicisation of the statistical process and the credibility of subsequent releases.

US employment change

Supply or demand: what is slowing hiring

Tighter immigration policy may have constrained labour supply at the margin, but it could be a secondary factor. Evidence points more clearly to softer demand for workers. Household surveys indicate that finding a job has become more difficult. According to the Atlanta Fed, job switchers no longer enjoy higher wage gains than job stayers. The NFIB survey shows small firms are finding it easier to fill vacancies. These signals align with a deceleration in hiring.

On the chart of the Atlanta Fed Wage Growth Tracker – Job Switchers (i.e., the median wage growth of people who changed jobs over the past year), wage dynamics are steadily slowing to 4.3% year on year in July 2025. This points to a fading job-switching premium and weakening demand for workers, which typically eases wage pressure in services and supports disinflation. The current level is close to conditions seen before the post-pandemic boom, thus arguing for a more accommodative Fed policy.

Chart of the Atlanta Fed Wage Growth Tracker – Job Switchers

August forecast: 74k jobs and a higher unemployment rate

Given the scale of recent revisions, the initial print should be read with caution. Market baseline is a 74k increase in payrolls, close to July’s 73k. Economists surveyed by Bloomberg expect the US unemployment rate to rise from 4.2% to 4.3%., reflecting weaker demand for labour.

Implications for Fed policy

Such an outcome would strengthen the case for a rate cut at the 17 September meeting. Moderating payrolls and a higher jobless rate would support a gradual shift toward easier policy, especially after the sizeable downward revisions weakened the recent labour market narrative. At the same time, uncertainty around the integrity of the statistical process argues for care in interpreting first releases.

Market implications

Softer labour data would typically pull down front-end yields and reinforce a gentler rate path, which often weighs on the US dollar against risk-sensitive currencies and supports assets that benefit from a lower rate. However, questions about data quality could keep near-term volatility elevated across rates, FX, and equities.

Risks and watchpoints

Upside surprises in payrolls, particularly if accompanied by firm wage growth, could temper dovish pricing. Another round of negative revisions would deepen the perception of cooling. The interaction between job growth, unemployment, and pay dynamics will determine both the strength and the speed of any policy easing.

Source: marketpulse

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Winkelmann

China–U.S. Trade War

Economic

Forex

Political

Key points:

● Trump comments seen aimed at pressuring Supreme Court

● Fate of trade deals uncertain

● Senate Democrat says Trump's comments caused confusion

President Donald Trump said on Wednesday the U.S. might have to "unwind" trade deals it reached with the European Union, Japan and South Korea, among others, if it loses a Supreme Court tariffs case, and warned that a loss would cause the U.S. "to suffer so greatly."Trump, speaking to reporters at the White House, said his administration will ask the Supreme Court to reverse a U.S. appeals court ruling last week that found many of his tariffs were illegal. Trump, however, said he thought his administration would prevail in the case.

"We made a deal with the European Union where they're paying us almost a trillion dollars. And you know what? They're happy. It's done. These deals are all done," he said. "I guess we'd have to unwind them."The comments were Trump's first specifically suggesting the trade deals reached with major trading partners - which were negotiated separately, outside of the tariffs - could be invalidated if the Supreme Court lets Friday's ruling stand.Trump said rescinding the tariffs would be costly, although trade experts note that the duties are paid by importers in the United States, not companies in the countries of origin. Economists have warned that tariffs are likely to fuel inflation in the United States.

"Our country has a chance to be unbelievably rich again. It could also be unbelievably poor again. If we don't win that case, our country is going to suffer so greatly, so greatly," Trump said.The appeals court ruling addressed the legality of what Trump calls "reciprocal" tariffs first imposed as part of a trade war in April, as well as a separate set of tariffs imposed in February against China, Canada and Mexico. The decision does not impact tariffs issued under other legal authority, such as those on steel and aluminum imports.

Trade experts said his comments on the cost of rescinding the tariffs were intended to convince the Supreme Court that removing the tariffs would unleash major economic chaos.Ryan Majerus, a former senior U.S. trade official who is now a partner with law firm King & Spalding, said it had been clear from the start that the trade deals with the EU and other trading partners were framework agreements that were subject to change, not fully fledged trade agreements."The president’s announcement today that the deals could be unwound reflects an effort to maximize leverage on the U.S. side," he said.

Legal and trade experts say the Supreme Court's 6-3 majority of Republican-appointed justices may slightly improve Trump's odds of keeping in place at least some of the tariffs after the appeals court ruled 7-4 last week that they are illegal.But they say it is difficult to predict exactly what the court will do, given rulings in past cases and the unprecedented nature of the challenge.Senator Ron Wyden, the top Democrat on the Senate Finance Committee, said Trump's comments sowed more confusion.“The Trump administration can’t get its story straight about whether its trade deals will hold any water if the tariffs are struck down," he said.

Source: TradingView

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Adam

Economic

U.S. stock futures were slightly higher, with investors eyeing steadying bond markets and looking ahead to the release of key U.S. economic data later in the week. The Trump administration files an appeal with the Supreme Court to hear its case to keep in place emergency powers which allow the president to impose a raft of import tariffs. Elsewhere, a Federal Reserve report shows little change in the economy in recent weeks, although firms remained worried over sticky inflation. Figma also delivers its first earnings report since its blockbuster initial public offering earlier this year.

Futures inch up

U.S. stock futures hovered just above the flatline on Thursday, as global bond markets stabilized after a bout of selling earlier in the week.

By 03:55 ET (07:55 GMT), the S&P 500 futures contract had added 8 points, or 0.1%, Nasdaq 100 futures had risen by 36 points, or 0.2%, and Dow futures were broadly unchanged.

Bond markets were calmed by comments from several Federal Reserve officials, including Governor Christopher Waller, which further bolstered wagers that the central bank will resume slashing interest rates at its next meeting later this month.

Meanwhile, an auction of longer-dated Japanese government debt saw tepid demand, but takeup was still enough to prevent fresh anxiety from gripping bond markets. The country’s 30-year bond yield had earlier spiked to an all-time peak. Yields tend to move inversely to prices.

On Wednesday, the benchmark S&P 500 and Nasdaq Composite both ended higher, boosted by a jump in shares in Alphabet following a court ruling which spared the Google owner from having to break up its sweeping operations.

A judge on Tuesday allowed Google to keep control of its popular Chrome browser and Android operating system, but barred it from securing some exclusive contracts. The decision also spared a lucrative payments deal between Google and Apple, spurring on a rally in the iPhone-maker’s shares.

Trump asks for Supreme Court review of tariffs

The Trump administration has asked the Supreme Court to hear its case for preserving the president’s trade tariffs, as the White House hopes to overturn a lower court ruling that most of the levies were illegal.

Imposing elevated duties on a range of nations has become a central pillar of President Donald Trump’s economic policy agenda since his return to power in January. He has said the moves are justified under a 1977 law meant for emergency powers, adding that they will help reshore American manufacturing jobs and correct trade imbalances he perceives to be damaging.

However, a federal appeals court ruled late last month that Trump had surpassed the boundaries of his authority by invoking the law, which is known as the International Emergency Economic Powers Act, or IEEPA.

In a written filing, Solicitor General D. John Sauer said the "stakes in this case could not be higher" and urged the high court to take up the matter by September 10 and hold arguments in November. The court’s new term is due to begin in October.

Trump, meanwhile, said he was confident that the Supreme Court would side with the administration, warning that not doing so could cause the U.S. economy to "suffer so greatly." He added that framework trade agreements recently notched with a range of trading partners might have to be unwound if the White House loses the case.

Fed’s Beige Book

The economy was mostly little changed over the past several weeks through late August, even as firms braced for further inflationary pressures, according to the Federal Reserve’s "Beige Book" report released on Wednesday.

"Most of the twelve Federal Reserve Districts reported little or no change in economic activity since the prior Beige Book period," the Fed said in its Beige Book, which is based on anecdotal information collected by the Fed’s 12 regional banks through August 25.

Across the districts, signs that consumers are becoming wary of spending increased because, for "many households, wages were failing to keep up with rising prices," the report noted, flagging "economic uncertainty and tariffs as negative factors."

In the labor market, eleven districts described little or no net change in overall employment levels. But there were potential indications of soft patches in the jobs picture, with the report suggesting that employers are becoming more hesitant to hire new workers.

"The Beige Book [...] described an economy facing ongoing stagflationary forces, with cooling growth and softening labor momentum alongside continued inflation pressure," analysts at Vital Knowledge said in a note.

Figma shares slump after results

Shares in Figma (NYSE:FIG) slumped by more than 15% in extended hours trading after the design software group’s first quarterly earnings report since its blowout market debut underwhelmed expectations among tech and artificial intelligence investors.

Figma’s stock price spiked after its initial public offering on July 31, giving the firm a value of roughly $50 billion and possibly paving the way for other high-profile tech flotations. But shares have since retreated, spurred in part by several Wall Street analysts opening their coverage of Figma in August with "neutral" ratings, citing worries around the company’s lofty valuation and intense competition.

Serving customers like online travel giant Airbnb and streaming video titan Netflix, Figma offers collaborative design software that enterprises can use to help build out websites, apps or other digital products.

Second-quarter revenue rose by 41% to $249.6 million, compared to etimates of $248.8 million, according to LSEG data cited by Reuters. Adjusted earnings per share came in at $0.09, versus forecasts of $0.08. Full-year revenue is also tipped to be between $1.02 billion and $1.03 billion. Analysts had seen it at $1.01 billion.

Yet analysts quoted by Reuters said that, despite the slight beat, Figma’s valuation means that even solid numbers may disappoint certain investors.

Gold slips from record high

Gold prices fell, facing some profit-taking after the yellow metal touched record highs, as the dollar steadied ahead of more cues on the U.S. labor market and interest rate cuts.

Bullion hit a series of all-time peaks this week, amid growing conviction that the Fed will cut interest rates at its Sept. 16-17 gathering.

Safe haven demand for gold was also supported by fears over stretched government debt levels in the developed world.

Spot gold fell 0.5% to $3,540.12/oz, while gold futures for December fell 1.0% to $3,598.20/oz by 03:49 ET.

Source:investing

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Stocks

Economic

Asia Market Wrap - Nikkei Gains 1.5%

Stock markets in Asia struggled to move higher on Thursday because a big selloff of Chinese stocks got worse, making investors nervous. This overshadowed the optimism from the previous day, when weak U.S. job data had made people hopeful that the American central bank might lower interest rates.

In some good news, Japan successfully sold its 30-year government bonds, which was a big relief for investors. They had been worried that no one would want to buy Japanese debt because of a recent global trend of selling bonds, political problems in Japan, and concerns about the country's finances.

Japan's Nikkei bounced back on Thursday after falling to its lowest point in almost a month on Wednesday. The recovery was led by Japanese technology companies, whose stock prices rose after similar tech companies in the U.S. performed well overnight.By the end of the day, the Nikkei index was up 1.5%.

The biggest winner was the tech-investing company SoftBank Group, with its stock jumping 6.5%. Other top performers included the cable-maker Fujikura and the chip-equipment maker Advantest.

The broader market index called the Topix also finished the day 1% higher.

Swiss Headline Inflation Steady, MoM Inflation Drops Into Negative Territory

In August, prices in Switzerland were 0.2% higher than they were at the same time last year, an inflation rate that was the same as July's and matched what experts predicted. The main reason for the increase was a big jump in the cost of clothing and shoes, along with small price rises for housing, energy, education, and restaurant meals.

However, this was balanced out because prices continued to fall for things like food, transportation, household items, and health services. A key measure called "core inflation," which ignores the changing prices of food and energy, actually slowed down slightly. Interestingly, when just comparing August to the month before, prices overall actually dropped by a tiny 0.1%, which was an unexpected decrease.

European Open - European Stocks Unchanged

European stock markets were mostly unchanged as investors felt cautious due to ongoing worries in the bond market.

The travel and tourism sector was the hardest hit, with its value dropping significantly. This was mainly because the British airline Jet2 warned that its profits for the year would be lower than it had previously hoped. As a result, Jet2's stock price dropped by a quarter of its value, and other travel companies like TUI and Easyjet also saw their shares fall 4% each.

In other news, luxury carmaker Porsche's stock also slipped nearly 1% after the company was moved from Germany's main stock index to a secondary one, following recent losses caused by U.S. import taxes and weaker sales in China.

On the FX front, the euro held onto the gains it made overnight trading at 1.1652, while the U.S. dollar was stable when measured against other major world currencies. The DXY was last trading at 98.27.

In contrast, the British pound continued to struggle after a tough week, dropping slightly and staying near the four-week low it hit on Wednesday. The Japanese yen saw very little movement and was trading at 148.16 per dollar.

Elsewhere, the Australian dollar lost a small amount of value, and the New Zealand dollar was trading at about $0.5869.

Currency Power Balance

Oil prices continued to fall, adding to the big drop they experienced the day before. This decline is happening as investors look ahead to a meeting this weekend of the major oil-producing countries, known as OPEC+.

At the meeting on Sunday, the group is expected to discuss increasing their oil production again for the month of October. Sources say the producers want to pump more oil to win back their share of the global market.

Currently, the price for Brent crude, the global standard, is around $67.17 a barrel, while the main U.S. oil price is about $63.53 a barrel.

Gold prices fell slightly as investors decided to sell and lock in their profits. This comes just one day after gold hit a new all-time record high price of $3,578.50 on Wednesday.

That record was driven by a growing belief that the U.S. central bank, the Federal Reserve, will soon cut interest rates. Now, investors are waiting for an important U.S. jobs report, which will be released on Friday, for more clues about the economy.

The current price for gold for immediate delivery is around $3,538.56 per ounce, while the price for gold to be delivered in December is about $3,596.20.

Economic Data Releases and Final Thoughts

Looking at the economic calendar, the European session will see attention shift to debt auctions in France and the United Kingdom, which have been at the center of Europe's bond selloff.

In the US session, markets will be focused on US ADP employment change data as well as S&P PMI data.

Also keep an eye out on news regarding the US-Japan trade deals as news filtered through a short-while ago that Japan and the US are in the final stages of talks to implement lower tariffs on Japanese auto imports. The reports also stated Japan and the US are to issue a joint statement on July trade accord, also MOU on rules for Japan's investment package

Chart of the Day - DAX Index

From a technical standpoint, the DAX Index has dropped below the 100-day MA but appears to have found support at the August 4 swing low at 23471.

Yesterday saw a mixed day for the DAX as the index fluctuated between gains and losses, finishing the day down marginally by 0.04%.

Immediate resistance is now provided by the 100-day MA with a break above leading to a potential retest of the 24000 handle.

There remains potential for further downside and a test of the lower band of the channel pattern which is in play. There is also support at the 23212 level which could come into a play in such a scenario.

DAX Daily Chart, September 4. 2025

Source: marketpulse

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Gerik

Economic

Private Payrolls and Labor Market Conditions Show Weakening Trends

U.S. private payrolls grew by 54,000 jobs in August, falling short of economists' expectations of a 65,000 increase, according to the ADP National Employment Report. The revised number for July showed a slight upward adjustment to 106,000 new jobs. This marks a slowdown in job growth, signaling easing conditions in the labor market.

The ADP report, released ahead of the more comprehensive employment report due from the Labor Department on Friday, provides an early snapshot of labor market trends. However, it has no correlation with the government’s data, which will be closely watched.

Economic Headwinds from Tariffs and Immigration Policies

Economists attribute the softening labor market to President Donald Trump’s tariffs and his immigration policies, which have led to a slowdown in hiring, particularly in sectors like construction and hospitality. A separate report by Challenger, Gray & Christmas showed a significant 39% jump in announced layoffs, with 85,979 job cuts in August, the highest level since 2020.

Additionally, the government’s data for July revealed that for the first time since the COVID-19 pandemic, there were more unemployed individuals than job openings available. This trend is contributing to growing concerns about the overall health of the labor market.

Labor Market Outlook and the Fed’s Response

The August nonfarm payrolls report, which will be released on Friday, is expected to show an increase of 75,000 jobs, a slight improvement from July’s 73,000. Over the past three months, the average monthly job gain has been 35,000, down from 123,000 during the same period in 2024. The unemployment rate is forecast to rise to 4.3% from 4.2% in July.

Federal Reserve Chairman Jerome Powell has signaled the possibility of a rate cut at the central bank's September meeting, acknowledging the weakening labor market while noting persistent inflation risks. The Fed has maintained its benchmark interest rate at 4.25%-4.50% since December, and many economists expect further action to address labor market concerns.

The U.S. labor market is showing signs of slowing down, with private payroll growth falling short of expectations and job openings decreasing. These trends could influence the Federal Reserve's decision on interest rates, particularly as economic risks mount. While the labor market has softened, inflationary pressures remain a concern, complicating the Fed's next steps.

Source: Reuters

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Adam

Stocks

Economic

MARKET WRAPS

Indexes in Europe were mostly higher Thursday, except for France's CAC 40 which fell ahead of a crucial confidence vote on Monday.

There was a sense of calm in European and U.S. bond markets after turbulence earlier this week when long-dated bond yields rose to multi-year highs.

"There are signs that the bond market rout could be over," XTB said.

Global government bond sales have been strong this week and, although risks remained due to fiscal and economic concerns.

Thrusday brings the U.S. ADP private payrolls report at 1215 GMT and weekly jobless claims at 1230 GMT and a test for Trump's campaign to bring the Federal Reserve under tighter White House control.

The Senate will weigh confirming economic adviser Stephen Miran to the central bank's board of governors.

The key data of the week continues to be Friday's nonfarm payrolls report.

U.S. Markets:

Futures were mixed and moves were muted early, after markets rose yesterday after data showed the number of job openings fell in July to the lowest level in ten months.

"Not good news in itself for the economy, but since it currently increases the likelihood that the Fed will cut interest rates at its meeting on September 17, it is still interpreted as stock market positive," SEB said.

Forex:

The dollar edged higher as investors turned their focus to labor market data for clues on the pace of expected Fed rate cuts.

ING said, while the prospect of weak employment data and the Fed resuming rate cuts at the September 17 meeting would usually be negative for the dollar, the currency could find some support from seasonal factors.

Bonds:

Treasury yields traded marginally higher.

"Yesterday's soft U.S. labour market data drove bond yields lower as the market looks for the Federal Reserve to cut rates in September," Danske Bank said.

The 30-year yield was again relatively comfortably below 5%.

Eurozone government bond yields edged lower, even as significant issuance volumes from Spain and France loomed.

"On the supply side, eurozone government bond markets will have to absorb a decent chunk of duration today, led by long-end [French] OAT auctions," Commerzbank said, adding that Bunds might recover further once this week's duration supply has been cleared, and with potential support from U.S. data.

Danske Bank said France's auction of long-dated government bonds was the last ahead of the government's upcoming confidence vote.

The Japanese finance ministry's auction of 30-year JGBs drew lackluster demand, which was widely expected amid fiscal concerns.

Energy:

Oil prices fell, extending the previous session's losses on concerns that OPEC+ members might consider releasing more barrels in October.

Benchmarks dropped Wednesday following a Reuters report that the alliance would consider boosting output further at a policy meeting this week, contrary to widespread market expectations.

"While insiders emphasized no final decision yet to be made, the signal was enough to deflate prices in a market prone to overreaction," Pepperstone said.

Meanwhile, investors await the latest U.S. stockpile report by the EIA due Thursday for insights into demand trends in the world's largest crude consumer.

Metals:

Gold futures fell, pulling back from record highs on profit taking but the precious metal remained up nearly 4% on week on expectations of a September U.S. interest-rate cut, tariffs raising costs and rising pessimism around market growth, Pepperstone said.

Gold has become a barometer of decreasing confidence in the economic and financial outlook, it added, saying inflows into gold assets have broadened beyond just exchange traded funds, and into major hedge funds and central banks.

Iron Ore Price

Recent cuts to China's crude steel output appear weighted toward scrap-based electric arc furnaces, lessening the impact on iron-ore demand, Morgan Stanley said, expecting iron ore around $100/metric ton in 4Q 2025 and 1Q 2026.

Lithium Prices

Citi was bearish on lithium prices for the next six months and said recent supply cuts were likely temporary, and a sustained market surplus should pull prices lower once more.

It had a 6-12 month target on spodumene SC6 of $800/ton, and over the same period expected lithium carbonate and lithium hydroxide around $9,000/ton and $8,750/ton, respectively.

EMEA HEADLINES

Swiss Inflation Holds Steady as SNB Mulls Rate Cut Below Zero

Swiss annual inflation held at a low level in August, keeping the country's central bank on guard as it considers cutting its key interest rate to below zero later this month.

Consumer prices were 0.2% higher than the same month of last year, matching July's rate, Switzerland's statistics office said Thursday. That remains within the Swiss National Bank's target of positive inflation lower than 2%.

Currys Shares Surge After Revenue Growth, Buyback Program Launch

Shares in Currys jumped after the company reported what it called a strong start to its fiscal year with revenue growth and launched a share buyback.

The stock was up 19% at 129.90 pence in European morning trading. Over the year to date, shares have climbed more than 36%.

Sanofi's Eczema Drug Candidate Hits Main Goals in Late-Stage Trial

Sanofi said its amlitelimab experimental drug met all main goals in a late-stage clinical trial with eczema patients.

The French pharmaceutical company said Thursday that amlitelimab showed efficacy in skin clearance and disease severity compared to placebo in a phase 3 study with adolescent and adults with eczema, also known as atopic dermatitis. The drug's efficacy increased progressively throughout the treatment period, the company added.

GLOBAL NEWS

A weak August jobs report will tee up the Fed to reduce interest rates. A worse one may spur even more cuts.

Is the August jobs report the biggest in years? Probably not, but another tepid increase in hiring is sure to cement a reduction in U.S. interest rates this month - and possibly more cuts after that.

Wall Street is certainly expecting a dull jobs report. Forecasters predict a small 75,000 increase in new jobs, with the unemployment rate rising a notch to a nearly four-year high of 4.3%.

July Brought Steady Hiring, Layoff Rates

Hiring and layoffs were broadly steady in July, according to data published Wednesday by the Bureau of Labor Statistics, a mostly reassuring sign about the labor market amid fears that the outlook for people with jobs could deteriorate.

The start of the summer saw no big uptick of firings, the data suggest, with the rate of layoffs in the economy holding steady at 1.1% from June-also the same level as 12 months ago. About 1.8 million people were laid off in July, showing just a slight uptick from the June level.

Fed Gov. Waller Eyes Multiple Rate Cuts. Other Officials Are Less Certain.

Federal Reserve governor Christopher Waller is pushing for lower interest rates at the central bank's policy meeting this month, but other officials are still taking a more cautious approach.

Waller not only wants to see the Fed cut rates at the coming Sept. 16-17 Federal Open Market Committee meeting, but said Wednesday that multiple rate cuts should be on the table over the next three to six months.

Shrouded in Mystery, Kim's Young Daughter Softens His Image in China

SEOUL-When Kim Jong Un stepped off his bulletproof train in Beijing for this week's extravagant commemoration of China's victory in World War II, a smiling young woman dressed in a demure navy pantsuit stood close behind the North Korean leader as he greeted China's foreign minister.

The woman wasn't North Korea's first lady-it was Kim's young daughter.

Trump Administration's Cuts to Harvard Funding Are Unconstitutional, Judge Rules

The federal government improperly cut off $2.2 billion in research funding from Harvard University and must restore the funds, a federal judge ruled Wednesday, concluding the Trump administration's actions violated Harvard's constitutional rights.

The ruling by U.S. District Judge Allison Burroughs of Massachusetts comes as Harvard and the Trump administration have been in talks to resolve months of the government's pressure tactics over what it calls antisemitism and diversity-related concerns. President Trump said last month that he wants no less than $500 million from Harvard, telling Education Secretary Linda McMahon during a cabinet meeting: "They've been very bad. Don't negotiate."

Rubio Reassures Mexico After U.S. Military Strike Jolts Region

MEXICO CITY-Secretary of State Marco Rubio pledged to foster security cooperation and respect Mexico's sovereignty and territory a day after the U.S. military sank an alleged drug-carrying boat in the Caribbean, a major escalation that rattled regional partners and adversaries alike.

Rubio kicked off his visit to Mexico and Ecuador, two allies in the Trump administration's war on drugs, meeting with Mexican President Claudia Sheinbaum at the ornate National Palace in Mexico City on Wednesday morning. Bilateral security issues and the war against powerful drug cartels headed the agenda.

Source: morningstar

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Economic

Revised Productivity Figures Show Stronger U.S. Economic Performance

U.S. worker productivity for the second quarter of 2025 was revised sharply higher, with hourly output per worker rising at a 3.3% annualized rate, up from the previously reported 2.4%. This revision was higher than economists' expectations, who had forecast an increase to 2.7%.

The improved productivity figures help to curb rising labor costs, a key metric for assessing inflationary pressures. In the first quarter, productivity had declined at a 1.8% rate. Compared to the previous year, productivity grew by 1.5%, which was also revised up from the initial estimate of 1.3%.

Moderating Labor Costs

Unit labor costs, which reflect the price of labor per unit of output, increased at a rate of 1.0% in the second quarter, down from the previously reported 1.6%. This moderation in labor costs suggests that while workers are producing more, the price of labor relative to output is rising at a slower pace. Year-over-year, labor costs rose by 2.5%, slightly down from the earlier estimate of 2.6%.

Economists and analysts suggest that a boom in artificial intelligence (AI) investment could further boost productivity in the coming quarters. With increasing technological investments, businesses could see improvements in efficiency, which would contribute to enhanced productivity growth in the future.

The upward revision of productivity growth in the second quarter is a positive signal for the U.S. economy, indicating that businesses are becoming more efficient. The slower growth in labor costs is also a sign of potential price stability, as businesses manage to improve output without significantly increasing expenses. As AI investment continues to rise, it could provide further momentum to productivity growth, supporting overall economic performance.