SEC and CFTC aim to Harmonize Crypto Rules, Boost US Market Leadership

Cryptocurrency

Political

Summary:

The financial regulators stressed that clear rules for DeFi and perpetual contracts could redirect more activity to US platforms.

The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) will hold a joint roundtable on Sept. 29 to advance regulatory coordination in the digital asset sector.

In a Sept. 5 joint statement, the agencies said fragmented oversight in the past had discouraged innovation and driven some crypto activity overseas. They stressed that harmonization is no longer optional, noting that a failure to coordinate has created uncertainty that hinders economic activity even when products are legally permissible.

SEC Chairman Paul Atkins and CFTC Acting Chairman Caroline Pham emphasized that harmonization can lower barriers, improve efficiency, and reaffirm US leadership in financial markets.

According to the financial regulatory chiefs: “By working in lockstep, our two agencies can harness our nation’s unique regulatory structure into a source of strength for market participants, investors and all Americans.”

The event follows the President’s Working Group on Digital Asset Markets recommendations, which urged regulators to create a fit-for-purpose framework that supports innovation while protecting investors.

Key priorities

The Sept. 29 roundtable will examine measures to align US markets with the global, always-on economy.

Among the priorities under consideration is the expansion of trading hours across select asset classes. The financial regulators said markets such as foreign exchange, gold, and crypto already operate continuously, and extending trading windows could improve liquidity while maintaining investor protections.

The agencies also plan to review frameworks for prediction markets and perpetual contracts. By clarifying rules for event-based contracts and onshoring compliant perpetual swaps, they aim to channel more trading activity back to US platforms.

Another proposal centers on portfolio margining. A coordinated framework could allow firms to recognize offsetting positions across asset classes and reduce capital inefficiencies.

The SEC and CFTC stressed that harmonized margin requirements would make net exposures easier for market participants while preserving risk safeguards.

The agencies further intend to explore exemptions that provide safe harbors for decentralized finance (DeFi) projects. These exemptions would create structured environments for peer-to-peer trading of spot, leveraged, or margined products without undermining investor protection standards.

Source: Cryptoslate

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Manuel

Economic

Central Bank

U.S. job growth weakened sharply in August and the unemployment rate increased to nearly a four-year high of 4.3%, confirming that labor market conditions were softening and sealing the case for a Federal Reserve interest rate cut later this month.

The Labor Department's closely watched employment report on Friday also showed the economy lost jobs in June for the first time in four and a half years, fanning fears of economic stagnation. Job growth has slowed since April, with economists blaming President Donald Trump's policies, mainly tariffs on imports, an immigration crackdown and mass firings of public workers.

"The economy is skating as close to the edge of recession as you can get," said Christopher Rupkey, chief economist at FWDBONDS. "Companies are clearly hunkering down and refusing to hire and the blame can be traced back to Washington's economic agenda. The only medicine to help is a rate cut from the Fed."

Nonfarm payrolls increased by only 22,000 jobs last month after rising by an upwardly revised 79,000 in July, the Labor Department's Bureau of Labor Statistics (BLS) said. Economists polled by Reuters had forecast payrolls would rise by 75,000 jobs after a previously reported gain of 73,000 in July.

Revisions to the establishment survey data also showed payrolls declined by 13,000 jobs in June, the first drop since December 2020, rather than rising by 14,000, as had been reported last month. US Unemployment Rate Near 4-Year High as Labor Market Hits Stall Speed_1

US Unemployment Rate Near 4-Year High as Labor Market Hits Stall Speed_1

Those revisions confirmed the weak trend flagged by massive downgrades to the May and June payrolls counts in the July report that led Trump to fire the BLS' commissioner, Erika McEntarfer. The president accused her, without evidence, of manipulating the employment data.

Economists attributed the revisions to the "birth-and-death" model, a method the BLS uses to try to estimate how many jobs were gained or lost because of companies opening or closing in a given month.

While Trump on Friday did not directly comment on the employment report, he reiterated his longstanding grievance with Fed Chair Jerome Powell over high borrowing costs.

"Jerome 'Too Late' Powell should have lowered rates long ago. As usual, he's 'Too Late!'" Trump wrote on his Truth Social media platform.

E.J. Antoni, Trump's choice to head the BLS, has penned opinion pieces critical of the agency and even suggested suspending the monthly employment report. Antoni is viewed as unqualified by economists across the political spectrum.

Trump´s import duties have boosted the nation's average tariff rate to the highest level since 1934 and stoked fears of higher inflation, prompting the U.S. central bank to pause its interest rate cuts.

Just as some of the uncertainty over trade policy was starting to lift with most tariffs now in place, a U.S. appeals court ruled last Friday that many of the duties were illegal, keeping businesses in a state of flux.

WEAK BIAS IN AUGUST

August's payrolls could be revised higher as the initial job count has tended to exhibit a weak bias because of a seasonal quirk. Nonetheless, employment growth has softened considerably, averaging 29,000 jobs per month in the last three months, compared to 82,000 during the same period in 2024.

Slow job growth is likely to be reinforced when the BLS on Tuesday publishes its preliminary revision estimate to the level of employment for the 12 months through March.

Based on the currently available Quarterly Census of Employment and Wages data, economists estimate the level of employment could be revised down by as much as 800,000. The QCEW data is derived from reports by employers to the state unemployment insurance programs.

The bulk of the jobs added in August were in healthcare, with payrolls in the sector rising by 31,000. But even this labor market pillar is showing strain, as the increase was below the average monthly gain of 42,000 over the last 12 months.

Employment in the social assistance industry rose by 16,000 positions. Government data this week showed healthcare and social assistance job openings posting large back-to-back declines in July.

Federal government payrolls dropped by 15,000 and employment in that area is now down 97,000 since January, amid deep spending cuts by the White House. A sharp decrease is expected in October after employees collecting severance pay fall off payrolls in September.

Manufacturing shed jobs for the fourth straight month, underscoring the impact of tariffs.

There were also job losses in a number of other sectors, including wholesale trade, information, financial activities, construction, and professional and business services. US Unemployment Rate Near 4-Year High as Labor Market Hits Stall Speed_2

US Unemployment Rate Near 4-Year High as Labor Market Hits Stall Speed_2

Wages, however, remain the labor market's bright spot and could help sustain the economic expansion for now. Average hourly earnings increased 0.3%, matching the gain in July. In the 12 months through August, wages advanced 3.7% after rising 3.9% in the comparable period in July. But a drop in hours worked raised concerns about economic growth prospects.

"Today's news probably raises more questions about the growth outlook than about the Fed outlook," said Michael Feroli, chief economist at J.P. Morgan. "With the August data in hand, private hours worked look to be contracting at about a 0.5% annual rate this quarter. At this point, we are inclined to take a little more signal from the labor data and remain cautious about growth prospects next quarter."

Financial markets expect the Fed will deliver a quarter-percentage-point rate cut at its September 16-17 policy meeting, with two more such moves at its remaining two meetings in 2025. The central bank has kept its benchmark overnight interest rate in the 4.25%-4.50% range since December.

Stocks on Wall Street were trading lower. The dollar declined against a basket of currencies. U.S. Treasury yields fell.

The unemployment rate edged up from 4.2% in July to the highest level since October 2021. The household survey from which the jobless rate is derived showed 436,000 people entered the labor force, but employment only increased by 288,000.

Economists were skeptical of the labor force increase. The Trump administration has terminated temporary legal status for hundreds of thousands of immigrants. More people experienced long bouts of unemployment in August.

The average duration of joblessness jumped to 24.5 weeks, the longest since April 2022, from 24.1 in July. There were more people who have permanently lost their jobs.

"The labor market has hit stall speed," said Nicole Cervi, an economist at Wells Fargo.

Source: Reuters

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Manuel

Central Bank

Economic

After a surprisingly weak U.S. payrolls report that underscored that the economy is slowing, investors see the need for accelerated monetary easing, including an increased chance of a jumbo interest rate cut this month.

Heading into Friday's employment report, investors were already widely projecting the Federal Reserve to lower its benchmark interest rate by a standard quarter-point at its September 16-17 meeting, in what would be its first reduction in nine months. Fed Chair Jerome Powell had set the stage for such a cut in remarks last month that pointed to risks in the labor market.

But after data showed U.S. jobs grew by a paltry 22,000 in August, well below estimates, market pricing began making room for the possibility of a heftier half-percentage-point reduction, while more easing is now expected through 2025 overall.

"This is two disappointing jobs reports in a row and certainly makes the case for a weakening economy," said Jack Ablin, founding partner and chief investment officer at Cresset Capital. "If you combine that with Chairman Powell's bias toward full employment rather than price stability, it does suggest that the Fed could go more than originally planned."

The prospect of lower interest rates has been a support for stocks in recent weeks but equities wavered after Friday's report. Stock futures jumped initially after the data, before reversing course. The benchmark S&P 500 was last down 0.5%.

"If investors are focused on Fed policy cuts, then that could be supportive of the stock market," said Jim Baird, chief investment officer with Plante Moran Financial Advisors.

"If investors are instead looking at it as a precursor to further slippage in labor conditions and job losses and perhaps an economy that softens up further from here, that's not good news for stocks."

Investors piled in to U.S. Treasuries, sending both short and long-term yields lower. The benchmark U.S. 10-year Treasury yield fell as low as 4.06%, its lowest in about five months. Meanwhile, in foreign exchange markets, the prospect of accelerated rate cuts sank the dollar index to a near six-week low.

"We find G10 FX is trading with front-end nominal yields. That's why the dollar dropped after weaker-than-expected payrolls," said Benjamin Ford, researcher at macro research and strategy firm Macro Hive.

Fed fund futures as of Friday afternoon were baking in a 10% chance of a 50 basis-point reduction later this month, with the 90% balance of probability on a 25 bp cut, according to LSEG data.

When the Fed started its cutting cycle in September 2024, the central bank began with a half-percentage-point reduction, noted Blair Shwedo, head of investment grade sales and trading at US Bank.

"So I would imagine the market is looking back at that and realizing the Fed is not scared to start out with a more aggressive 50 bp cut," Shwedo said.

Mark Malek, chief investment officer at Siebert Financial, said a 50 basis-point move "would add a tailwind to the (stock) market."

"It would definitely be a boost for the megacap growth stocks, and a green light for investors to take on more risk," Malek said.

A 50 basis-point cut could lead to the "capitulation" of short bets for the front-end part of the Treasury curve, which may exacerbate volatility in the bond market, said Slawomir Soroczynski, head of fixed income at Crown Agents Investment Management.

The prospect of more aggressive easing could also further raise fears about inflation. Current inflation rates are still above the Fed's 2% target and Powell and other Fed officials have been wary that President Donald Trump's tariffs could lead to higher prices.

"Powell’s concern is there’s still tariff uncertainty, and he knows that from an inflation standpoint the increase in risk sentiment will certainly spur asset price inflation," said George Cipolloni, portfolio manager at Penn Mutual Asset Management. "Now will it spur consumer price inflation? That's the tug of war."

Not everyone was convinced a hefty cut was coming after the jobs data. August is a "noisy month" with figures that tend to get revised higher, said Phil Blancato, chief executive officer of Ladenburg Thalmann Asset Management.

And more data will come ahead of the Fed meeting, in particular next Thursday's August Consumer Price Index report that offers another read on inflation trends.

"Inflation is still a major concern and is not being tamed by the slower economic growth," said Melissa Brown, managing director of investment decision research at Simcorp.

Source: Reuters

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Kevin Du

Economic

Gold's powerful rally took on fresh legs on Friday, with prices just cents away from $3,600 per ounce, as weak U.S. jobs data further raised expectations for bullion-supportive Federal Reserve rate cuts.

Spot gold was up 1.5% at $3,596.01 per ounce, as of 1636 GMT, having hit a record $3,599.89 earlier. The metal is now on track for its strongest weekly gain in nearly four months. U.S. gold futures for December delivery rose 1.3% to $3,651.90.

Bullion has surged 37% so far this year after a 27% gain in 2024 - driven by U.S. dollar weakness, central bank buying, a softening monetary policy backdrop and wider geopolitical and economic uncertainty.

Spot gold and US dollar

Data showed U.S. job growth weakened sharply in August while the unemployment rate increased to 4.3%, confirming that labour market conditions were softening. Traders are now betting an 86% chance of a 25-basis-point rate cut and a 14% chance of a 50 basis-point cut in September.

"Gold makes new highs; bulls are looking at the clearly weakening trend of employment translating into multiple rate cuts," said Tai Wong, an independent metals trader.

"The outlook is undoubtedly bullish for gold as labour concerns override inflation for the short, probably medium term. However, I think we are still too far away from 4,000 unless there is a massive dislocation," Wong added.

Analysts have also flagged the independence of the Fed as a key factor in shaping gold's trajectory - an issue thrust into the spotlight after U.S. President Donald Trump attempted to fire Fed Governor Lisa Cook and put repeated pressure on the central bank to slash rates.

Bullion, which does not pay interest, tends to shine when rates are low and uncertainty is high, making it a go-to asset for investors seeking safety.

China and India are top gold consumers. Physical demand for gold in these hubs dropped this week due to record high prices.

August gold in reserves data from China's central bank, due on Sunday, will not catch the September record highs, but may still provide more clarity on how demand from central banks was being affected by high bullion prices.

Among other metals, spot silver rose 0.9% to $41.02 per ounce and was heading for its third consecutive weekly gain.

Platinum gained 0.6% to $1,379.45 and palladium fell 1.8% at $1,106.86.

Source: Reuters

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Devin

Economic

Commodity

Most crop prices gained Friday, with corn rising to the highest level since July amid robust export demand for the yellow grain.

Exporters sold 1.8 million tons of corn last week, more than analysts expected on average, according to the US Department of Agriculture.

Corn futures rose as much as 1.2%, extending a rally from an almost one-year low in mid-August.

Prices were being supported by expectations that the record corn yield forecast by the USDA in August might be lowered in the agency’s monthly WASDE report, out next week. Advisory service StoneX on Thursday trimmed its estimate for US corn yields, but hiked output.

“Oversold technical indicators are providing some support, but more and more is coming from lower-than-expected corn yields to start the US harvest,” Consus Ag Consulting analyst Karl Setzer said in a note. “While trade wants to see the official updated yield from the USDA in next Friday’s WASDE report, the more reports they hear of lower yields the less willing they are to extend market pressure.”

Source: Bloomberg Europe

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Daniel Carter

Economic

Political

"The Swiss like to say they're a small country of only 9 million people — a small country, a rich country," he said Friday in an interview on Bloomberg Television's Surveillance. "And how did they become so rich? They sell us pharmaceuticals like it's going out of style, right? They make so much money off America, that's why they're rich. So let's hear what they have to say."

Lutnick's remarks come ahead of another meeting between US and Swiss officials after failed trade talks last month resulted in a 39% tariff rate for the European country. The US administration has repeatedly criticized Switzerland, which isn't part of the European Union, for its large current account surplus.

The Swiss argue that the trade balance for goods is distorted by various factors including gold, which is only refined in Switzerland. Officials have also pointed to services, where the situation is reversed.

Lutnick damped hopes for a breakthrough for the meeting with Swiss Vice President Guy Parmelin, who has traveled to the US. "I am not optimistic."

Pharmaceuticals are Switzerland's biggest export sector and the country is home to Novartis AG and Roche Holding AG, which are among the biggest drug makers in the world. Roche Chairman Severin Schwan is helping the Swiss government to get a better trade deal.

So far, pharma has been exempted from tariffs — only as the US administration prepares a separate levy for drugs under a different legal authority — and Lutnick's comments are the strongest public remarks yet with respect to that Swiss industry.

"Now you go to Switzerland, 9 million people," he said. "I mean, what are they going to offer the American exporter, as compared to the size and scale by which they export and earn money off of us?"

Source: Bloomberg Europe

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Thomas

Economic

Canada unexpectedly shed jobs for a second month running in August, extending a soggy summer for a labor market that is showing signs of weakness broadening beyond areas directly hit by tariffs and trade worries.

Employers in the country cut a net 65,500 jobs last month, the steepest decline since the start of 2022 when another Covid-19 variant forced widespread lockdowns, Statistics Canada said Friday. That builds on the 40,800 jobs shed in July to leave the unemployment rate 0.2 percentage point higher, at 7.1%.

The bulk of the jobs lost in August were in part-time roles--unlike in the month before, when losses were concentrated among full-time positions--though much of the decline was among adults even as returning students continued to struggle to find work. August also saw a another slump in employment in services jobs not reliant on trade or in the firing line of higher tariffs.

The data bolsters expectations the Bank of Canada will be pushed to resume cutting interest rates as soon as this month, after the economy contracted more sharply than anticipated in the second quarter and with inflation sitting below the central bank's 2% target four months running. And there are some economists now expecting rate cuts may have to be deeper than previously envisaged.

"Economic weakness is broadening and requires monetary action. We need interest rates in a stimulative stance," said Etienne Bordeleau Labrecque, a portfolio manager at Ninepoint Partners, who now expects the bond market to start pricing in a steep half-percentage-point cut in the Bank of Canada's policy rate at its meeting Sept. 17.

The weakness in Canadian employment echoed the deterioration in the U.S. labor market, where fewer jobs were added to the economy than expected and the unemployment rate ticked up 0.1 point, to 4.3%. That likely seals the case for the Federal Reserve to also lower interest rates at its meeting in two weeks, while potentially raising worries for the Bank of Canada about weakening demand in the U.S., by far Canada's largest export market.

When calculated using U.S. Labor Department methodology, Canada's unemployment rate was 0.2 point higher at 6%.

Canada's jobless rate has now risen half a percentage point since January, when there was a jump in employment, and it now sits at its highest level since May 2016, outside of the peak during the pandemic lockdowns in 2020 and 2021. Economists were expecting an August unemployment rate of 7%, and for employment to have steadied with a modest rise of 10,000.

Business and household sentiment remains subdued, even as trade tensions between Canada and its neighbor have eased. The bigger-than-expected step up in the unemployment rate in August came despite the labor force contracting for a second month in a row and with the participation rate--the proportion of working-age Canadians either employed or looking for work--dipping 0.1 point, to 65.1%.

The data also showed the struggle to find work after being laid off is intensifying, with roughly 15% of those who were jobless in July finding work the next month, compared with just over 23% in the same period of 2017 to 2019 before the onset of the pandemic.

There are few signs conditions will improve in the coming months. The Canadian Federation of Small Business's latest monthly survey found little appetite for new staffing, with plans to hire part-time workers remaining negative and with only slightly more employers looking to add full-time roles than those planning to reduce them. At the same time, the federal government has warned of coming job losses in the public sector as it looks to tighten spending even as it promotes big development projects.

The job picture for manufacturers, who have been hit hardest by the Trump administration's trade policies and tariffs, continues to decline. There were 19,200 fewer manufacturing jobs last month, down 1.0% from the month before, and losses since January now sit at roughly 58,000, or 3.1%.

At the same time, employment in professional, scientific and technical-services roles fell by 26,100, a 1.3% pullback from July. That follows a 3.3% drop in jobs in information, culture and recreation positions in July.

There also were fewer jobs in August in transportation and warehousing and in education, which tends to be volatile in the summer months. Among the few bright spots, there was a rise in employment in construction and in restaurants and hotels.

The labor numbers indicate the Bank of Canada is more likely to be concerned about the economy and less about stickiness in core inflation, which faces less immediate threat of heating up from tariffs after Ottawa sharply scaled back the imports from the U.S. that are hit by its retaliatory levies, economists said.

"An undeniably soft August employment report in our view solidifies a resumption of rate cuts by the Bank of Canada this month," said Citi economist Veronica Clark, who expects the central bank will do more than fine-tune its policy rate and will cut 1 percentage point in all to take the rate to 1.75% by early next year. "The unemployment rate rising above 7% clearly suggests demand further undershooting labor supply even with slowing population growth this year."