Key Takeaways
- Federal Reserve Governor Christopher Waller signaled a preference for holding interest rates steady at the September 15-16 meeting, provided upcoming inflation data continues to show progress toward the 2% target.
- The Japanese Yen surged as much as 2% against the U.S. Dollar, reaching its strongest level since early August amid speculation of a more aggressive Bank of Japan rate hike trajectory.
- U.S. Labor Productivity for Q2 was confirmed at a 1.4% annualized rate, while Unit Labor Costs were downwardly revised to a 1.2% increase, suggesting easing inflationary pressures from the labor market.
- AbbVie (ABBV) reaffirmed its Q3 and full-year 2026 EPS guidance following the completion of its $10.9 billion acquisition of Apogee Therapeutics.
- Saudi AI firm HUMAIN is reportedly seeking to raise a $2.5 billion fund to expand its data center footprint, part of a broader push to establish the Kingdom as a global hub for AI infrastructure.
Waller Urges Patience as Disinflation Takes Root
Federal Reserve Governor Christopher Waller stated on Thursday that he is "finally seeing some signs of disinflation" in recent economic data. Speaking at a Reuters NEXT event, Waller indicated he would be inclined to support keeping the federal funds rate at its current 3.50%–3.75% range during the September FOMC meeting if August inflation data remains favorable. He emphasized that the three-month core inflation rate, which fell to 3.05% through July, is a more encouraging gauge than the lagging 12-month figures.
Despite the dovish lean, Waller maintained that policy remains only "slightly restricting" and warned that he would consider a September rate hike if August's data shows progress has reversed. He noted that while GDP growth continues at a "solid" pace—rising 1.8% in the first half of the year—the Fed must remain vigilant as inflation remains meaningfully above its long-term goal. Waller also highlighted that AI investment is a "legitimate" contributor to GDP and is expected to reliably boost future productivity.
Markets React to Labor Data and Currency Volatility
U.S. labor market data released Thursday showed initial jobless claims rose slightly to 206,000 for the week ending August 29, marginally above the expected 205,000. Meanwhile, revised figures for the second quarter showed nonfarm productivity grew at a 1.4% rate, while unit labor costs increased by just 1.2%, down from the previous estimate of 1.3%. These figures suggest that businesses are managing labor costs effectively, providing the Fed with more breathing room regarding interest rate decisions.
In currency markets, the Japanese Yen saw a dramatic appreciation, extending gains to 2% against the dollar. The move was fueled by hawkish comments from Bank of Japan officials and rumors of potential currency intervention to stabilize the yen. This surge pressured the U.S. Dollar Index, which fell to 99.25 as traders pared back bets on further Fed tightening following Waller's remarks.
Corporate Developments: AbbVie and Saudi AI Ambitions
Pharmaceutical giant AbbVie (ABBV) confirmed it is sticking to its 2026 financial outlook, reaffirming adjusted diluted EPS guidance of $13.87–$14.07 for the full year. The company also completed its $10.9 billion acquisition of Apogee Therapeutics, a move intended to bolster its immunology pipeline with late-stage assets like zumilokibart. While the deal is expected to be $0.14 dilutive to 2026 EPS, management noted that strong operational performance has partially offset the impact.
In the technology sector, Saudi Arabian AI firm HUMAIN is moving forward with plans for a $2.5 billion data center fund. This follows the announcement of a strategic partnership with Together AI and the live deployment of AMD (AMD) and Cisco (CSCO) powered infrastructure in the Kingdom. The firm aims to deploy up to 1 GW of AI infrastructure by 2030, positioning Saudi Arabia as a major exporter of computing power.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.