Morning Bid: Jobs news, AI blues and falling oil

By Mike Dolan

Dec 16 – What matters in U.S. and global markets today

By Mike Dolan, Editor-At-Large, Finance and Markets

The rare occurrence of a Tuesday U.S. payrolls report focuses markets’ attention back on the labor market against a backdrop of an ongoing retreat from top artificial intelligence stocks and hopes for a breakthrough in Ukraine talks.

A long-absent readout on the national employment picture is due for release later, with payrolls updates from both October and November and an unemployment rate just for the latter – with a hole in the jobless rate series for the first time since 1948.

A one-two on payrolls tallies – a hit to October from the government shutdown and a recovery last month – is the consensus forecast, with the jobless rate expected to emerge steady at 4.4% for November.

The likely noisy data will fill in most gaps in the Federal Reserve’s and investors’ view of the jobs market but also leave enough questions to keep markets guessing on next year’s interest rate trajectory. Retail sales updates for October are also due.

As it stands, futures markets price just a one-in-four chance of another Fed rate cut next month and another quarter point move is not fully priced until June.

Going into the report, long-dated Treasuries remain on the back foot – with the two-to-30-year yield curve steepening to its widest since the April tariff shock.

The dollar probed lower, most notably against China’s yuan – which strengthened to new 14-month highs despite local stock market losses and Monday’s sweep of downbeat Chinese economic data. The yen also firmed ahead of Friday’s expected Bank of Japan interest rate rise.   

Wall Street stocks clocked another down day on Monday, with considerable rotation of stock sectors marking the year-end and AI-related stocks continuing to beat a retreat. Broadcom and Oracle both fell for the third day following last week’s earnings-day shakeouts and Oracle hit its lowest since June.

Tech-heavy stock markets in Tokyo and Seoul had another bad day on Tuesday, with South Korea’s Kospi losing more than 2%. And Wall Street futures were still in the red ahead of today’s bell.

Signs of some movement in Ukraine peace talks saw oil prices sink to their lowest since May – a relief for inflation expectations as the year-on-year crude price is now down more than 21%.

European defense stocks slid after the U.S. offered to provide NATO-style security guarantees for Kyiv and European negotiators reported progress in talks on Monday to end Russia’s war in Ukraine. Rheinmetall fell almost 5%, Hensoldt was off 3.6%, Leonardo shed 4.5% and the broader defense index was down 2% – its biggest one-day decline in more than two weeks.

The European Commission, meantime, is set to backtrack on the EU’s planned ban on new combustion-engine cars from 2035 by allowing continued sales of some non-electric vehicles following intense pressure from Germany, Italy and Europe’s auto sector.

In Britain, data showed the jobs market and private-sector pay growth weakening ahead of an expected Bank of England rate cut this week – although business surveys showed a pickup in activity this month.  

In today’s column, I look at how term risk premia are rebuilding within the U.S. Treasury market going into 2026. 

Today’s Market Minute 

* Nasdaq is planning to submit paperwork with the U.S.Securities and Exchange Commission to roll out round-the-clocktrading of stocks, as it looks to capitalize on a global demandfor U.S. equities. * President Donald Trump sued the BBC for up to $10 billionin damages over edited clips of a speech that made it appear hedirected supporters to storm the U.S. Capitol, opening aninternational front in his fight against media coverage he deemsuntrue or unfair. * A federal judicial panel said Monday it would centralize agrowing number of lawsuits against Novo Nordisk and Eli Lillyalleging patients lost some or all of their eyesight whiletaking the companies’ blockbuster weight loss drugs before ajudge in Pennsylvania.  * China’s flows of crude oil into storage probably jumped inNovember to the highest in six months, as a surge in importsoverwhelmed steady refinery processing rates, writes ROI AsiaCommodities Columnist Clyde Russell.  * Global shipments of thermal coal have posted their firstannual decline since 2020 on the back of lower coal-fired powergeneration in key Asian markets. Read more in ROI Global EnergyTransition Columnist Gavin Maguire’s latest column.

Chart of the day

European aerospace and defense stocks retreated 2% on Tuesday after the U.S. offered to provide NATO-style security guarantees for Kyiv and European negotiators reported progress in talks on Monday to end Russia’s war in Ukraine. The sector has more than tripled in value since Russia’s invasion of Ukraine in 2022.

Today’s events to watch (all times EDT)

* U.S. October and November employment reports (8:30), U.S. October retail sales (8:30), U.S. December flash business surveys from S&PGlobal (9:45)

* Bank of Canada Governor Tiff Macklem speaks; European Central Bank Board Member Pedro Machado speaks 

* U.S. corporate earnings: Lennar

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

(By Mike Dolan; Editing by Mark Potter)