Markets Overview

  • ASX SPI 200 futures little changed at 8,598.00
  • S&P 500 down 0.4% to 6,788.72
  • Dow Average down 0.7% to 48,060.79
  • Aussie little changed at 0.6636 per US$
  • US 10-year yield fell 2.6bps to 4.1470%
  • Australia 3-year bond yield rose 2.3 bps to 4.10%
  • Australia 10-year bond yield little changed at 4.73%
  • Gold spot up 0.1% to $4,310.93
  • Brent futures down 2.7% to $58.91/bbl

Economic Events

  • 11:00: (AU) Australia to Sell A$1 Billion 4.25% 2036 Bonds

Australia’s center-left government expects slightly narrower budget deficits across the forecast horizon, Wednesday’s mid-year update will show. RBNZ will phase in new bank capital requirements from early 2026.

Signs the US jobs market is sluggish, but not quickly deteriorating saw traders refraining from boosting bets on near-term Federal Reserve rate cuts, with stocks falling and bonds wavering.

A noisy reading reflecting some of the impacts of the government shutdown was met with caution. While big tech lifted the S&P 500 from session lows, the gauge struggled to make headway. Treasury yields edged down as swaps implied only 20% odds of a January Fed cut. A reduction is fully priced in by mid-2026.

Nonfarm payrolls increased 64,000 in November after declining 105,000 in October amid a contraction in federal employment. The unemployment rate was 4.6% last month, up from 4.4% in September and the highest since 2021.

“The report contains enough softness to justify prior rate cuts, but it offers little support for significantly deeper easing ahead,” said Kevin O’Neil at Brandywine Global. “With labor market signals sending mixed messages, the next inflation reading may become the primary driver for markets as we enter the new year.”

The Fed is unlikely to put much weight on the data given the disruptions, according to Kay Haigh at Goldman Sachs Asset Management.

“The report on December’s employment data, released in early January ahead of the next meeting, will likely be a much more meaningful indicator for the Fed when it comes to deciding the near-term policy trajectory,” Haigh noted.

While the jobs reading was a “gift” to those looking for the Fed to follow a dovish path in 2026, there’s no indication the broader economy has been derailed, noted Ellen Zentner at Morgan Stanley Wealth Management.

A separate report showed US retail sales were little changed in October as solid spending in several categories was muted by a decline at motor vehicle dealers.

The S&P 500 lost 0.2%. The yield on 10-year Treasuries dropped two basis points to 4.15%. The dollar was little changed. West Texas Intermediate oil sank to around $55 a barrel.