U.S. Refineries Can't Do Much More to Ease Product Squeeze — Market Talk

1500 ET - U.S. diesel prices hit a record-high $5.85 a gallon, according to AAA, and with U.S. refineries running flat out there's little more they can do at the margin to help ease the tightness in global products supply, BCA Research's chief commodities strategist Roukaya Ibrahim says. U.S. refineries operated at 98% of capacity last week, the EIA reported. Unlike China, which is giving priority to domestic crude supply, in the U.S. the energy producers are much more responsive to market conditions, she says. "Because the crack spread is wide, that really does improve their profit margins, so refineries are taking advantage of that." ([email protected])1413 ET - An interest rate increase by the Fed on September 16 is more likely than on October 28, Nuveen's Dan Close says. "You know, raising rates about a week before the election is tough," he says. August's jobs report was stronger than anticipated, boosting bets on a September hike. Close, who focuses on municipal bond markets, expects munis to move in tandem with Treasurys if the Fed moves. "It won't be as pronounced as the Treasury curve...we will likely move in sync if we do see a rate hike." ([email protected]; @ptrevisani)1408 ET - Treasury yields lose momentum but remain elevated, buoyed by better-than-expected U.S. employment numbers. August's 162,000 print on job creation is three times as high as forecast, bumping odds of a hike to 60% from 49% yesterday, according to CME. Looking under the hood, however, some economists argue that soft wage increases means monetary tightening isn't a done deal. Moreover, inflation numbers due next week could still change rate expectations. The WSJ Dollar Index is just above flat, after rallying on the job numbers. The 10-year yield is at 4.768% and the two-year at 4.372%, both off post-payrolls highs. ([email protected]; @ptrevisani)1332 ET - The hotter-than-expected August jobs report isn't, by itself, a strong case for the Fed to hike rates at the mid-September FOMC meeting, Mahoney Asset Management's Ken Mahoney says in a note. He is still in the camp that the Fed won't raise rates in September, and thinks the decision won't be solidified until the August CPI next week shows how hot or cold inflation is right now. "Barring a surprise CPI print, that is the call," Mahoney says. Fed Governor Christopher Waller just said he would support leaving rates unchanged if inflation looks tame, comments that the markets seemed to welcome, Mahoney says. ([email protected])1309 ET - Behavior as a "safe-haven asset" similar to gold is being seen in bitcoin--although macro signals are limiting investor appetite for it in this role, says James Butterfill of CoinShares in a note. He thinks that a resolution in the Iran conflict or "further deterioration in confidence in U.S. sovereign debt" could allow bitcoin to break out from resistance of $80,000. As for inflation, Butterfill thinks the market's pricing of a September hike still looks too aggressive, "particularly given softer labor data and the divergence now emerging within the Fed over how much weight to place on inflation versus employment." Bitcoin is down 2.1% to $79,823, while ethereum is off 1.8% to $2,461, and XRP falls 4.4% to $1.41. ([email protected])1205 ET - The better-than-expected jobs report shows the labor market is solid for current workers, but college graduates are still having a hard time finding work, Fifth Third Commercial Bank's Bill Adams says in a note. The rate of unemployment among recent grads in August was the highest since 2014, according to Adams. The cohort's unemployment rates are highly seasonal and spike every summer, but this past month had 12% higher unemployment than August 2025, he says. The weak hiring for grads is due in part to AI's impact on the job market, Adams says. ([email protected])1112 ET - Standard Chartered has launched institutional bitcoin and ether spot trading in the U.A.E. through its Dubai International Financial Centre branch, becoming the first Global Systemically Important Bank (G-SIB) to offer the service in the country. Eligible institutional clients can trade deliverable Bitcoin and Ether through the bank's existing electronic trading channels and settle trades with a custodian of their choice. The Dubai Financial Service Authority-regulated offering expands Standard Chartered's U.A.E. digital-asset business beyond custody, which it launched in 2024, and extends a spot-trading capability first introduced through its U.K. branch last year. ([email protected])1104 ET - The Federal Reserve's decision on whether to raise rates is complicated by the clash of a stable labor market with negative real wage growth, Allianz Investment Management's Charlie Ripley says in a note. The August report's addition of 162,000 jobs reinforces a strong narrative about low growth and low turnover, despite month-to-month volatility, Ripley says. Simultaneously, there's a downward trend in wage growth, which sank to an annual low of 3.09%, he says. Pair that with inflation, and real wage growth is actually negative, Ripley says. Consumers are feeling that squeeze, so raising rates could risk overtightening the economy, he says. August's jobs report shifts September hike expectations sharply, but the outcome is uncertain, Ripley says. ([email protected])1053 ET - For the past year, Canada's public sector has been a weak spot in the country's labor market, Statistics Canada data show. This coincides with the arrival of Canada PM Mark Carney, whose government has pledged to curtail operating expenditures through, among other things, a 10% cut to federal payrolls. Employment across Canada's public sector fell 20,000 in August, and is down 0.4% on a 12-month basis. Conversely, private-sector employment rose 1.1% in August from a year ago. Broken down further, the public-administration category has recorded job losses of roughly 19,000, 21,200 and 13,500 on a 3-, 6- and 12-month basis, respectively. Meanwhile, trade-exposed manufacturing sector recorded jobs gains over those time periods. ([email protected]; @paulvieira)1023 ET - The roughly 42,000 drop in Canadian employment in August is likely a labor-supply story, reflecting flat population growth, says Ali Jaffery, KPMG Canada's chief economist. Jaffery says the level of unemployment increased slightly in August, up 4,800, whereas the labor force contracted 37,000. "That size of a 'swing' in the labour force has become normal in this low-population growth economy," Jaffery says. Canada's population is estimated to have edged downward 0.1% in 2Q from the prior 3-month period, part of an attempt by Ottawa to limit immigration after years of fast growth. ([email protected]; @paulvieira)1015 ET - Canadian jobs data for August marked a step backward for the labor market, though after three months of consecutive employment gains reads more like a giveback than a turn for the market, Indeed economist Cory Stahle says. He notes that the three-month average of job gains remains positive, employment is up from last year, and young workers appear to be faring better than they did last year. Still, Stahle says the path ahead is uncertain and any potential impacts from reignited trade tensions between Canada and the U.S. may not be fully felt for months. ([email protected]; @RobbMStewart)1012 ET - The slowdown in annual average hourly wage growth in Canada, to 2% in August, marks a "sudden drop" following years of 3%-plus increases, says Tu Nguyen, economist at RSM Canada. This is "a sign of business caution, and a more balanced job market," she says. Recent data suggest headline inflation sits at 3%, fueled by gas prices. Nguyen says the wage slowdown should keep inflation anchored, as lower pay keeps business costs stable and reduces the need among firms to pass on higher costs to consumers. ([email protected]; @paulvieira)