Market Turmoil: Unemployment Rate Hits New High, Bulls Seek Breakthrough Amidst Difficulties

The U.S. labor market is sending concerning signals. The November employment data released on Tuesday showed the unemployment rate jumped to 4.6%, reaching its highest level in nearly four years, well above market expectations of 4.4%. This change reflects increasing economic fragility, with companies becoming more inclined to control hiring amid the AI wave.

Contradictions in Employment Data

On the surface, November non-farm payrolls increased by 64,000, exceeding the expected 50,000, indicating stable growth. However, this figure masks deeper issues. Federal Reserve informant Nick Timiraos pointed out that, over the past six months, the private sector has added an average of 44,000 jobs per month, the lowest post-pandemic level. Meanwhile, October non-farm jobs were sharply revised downward to a decrease of 105,000, the largest decline since the end of 2020.

During the U.S. government shutdown in October, data collection was incomplete, so the October unemployment rate was not announced. However, Federal Reserve Chair Powell has hinted that the unemployment rate could still rise by 0.1 to 0.2 percentage points. Without rounding, the actual November unemployment rate is 4.564%, up 12.4 basis points from September.

Recession Fears Spread

Market concerns about the U.S. economy have shifted from the margins to the center. The 10-year U.S. Treasury yield fell to about 4.14%, the dollar index declined 0.04% to 98.21, and WTI crude oil plummeted 2.66% to $55.17 per barrel. This “triple kill”—declines in Treasury yields, oil prices, and the dollar—clearly reflect market expectations of a recession.

The probability of the Fed cutting interest rates again in January remains at 24%, unchanged from the previous day, indicating that market expectations for a policy shift are being cooled by reality. The 2-year U.S. Treasury yield initially fell then rebounded, and the 10-year Treasury yield surged then retreated, reflecting investor uncertainty about future paths.

Mixed Stock Market Performance; Tech Stocks Tell Different Stories

The U.S. stock market’s three major indices showed divergence yesterday. The Dow Jones Industrial Average fell 0.62%, the S&P 500 declined 0.24%, marking its third consecutive day of decline, while the Nasdaq rose slightly by 0.23%. The China Golden Dragon Index dropped 0.34%. European stocks all declined, with the UK FTSE 100 down 0.68%, France CAC 40 down 0.23%, and Germany DAX 30 down 0.63%.

Among tech stocks, new leaders emerged. Tesla surged over 3% to a new closing high, becoming the seventh-largest company by market cap in the U.S. Nvidia, Apple, Microsoft, and Amazon gained between 0.01% and 0.81%. Meta rose 1.49% against the trend, while Google fell 0.54%.

Commodity and Currency Market Trends

Gold slightly declined 0.06% to $4,302 per ounce. Crude oil, specifically WTI, fell over 2.6% to $55.17 per barrel, reflecting concerns over global economic growth.

In the forex market, USD/JPY declined 0.31%, EUR/USD fell 0.05%, and the dollar index overall weakened to 98.21.

Cryptocurrency Market Slight Fluctuations

Bitcoin rose 1.42% over the past 24 hours, currently at $87,670 (updated to 87.67K). Ethereum fell 0.4%, now at $2,950.8 (latest data: 2.95K).

Hong Kong night session futures closed at 25,219 points, 16 points below the previous close. The China index night futures closed at 8,764 points, 6 points above the previous close.

Trump’s New Year Policy Announcement Imminent

U.S. President Trump is scheduled to deliver a prime-time speech at 9 p.m. ET (10 a.m. Taiwan time Thursday). This comes at a critical moment as his approval ratings have declined since returning to the White House, with the economy facing headwinds. Over the past year, Trump has frequently clashed with allies over trade, defense, immigration, and the Russia-Ukraine conflict. This speech provides a platform to emphasize achievements and preview priorities for the new year, as the Republican Party aims to retain control of Congress in the midterm elections next November.

Retail Sales Flat, Services PMI Below Expectations

U.S. retail sales in October were flat month-over-month, below the expected 0.1% increase. Excluding autos, retail sales increased by 0.4%, just surpassing the expected 0.3%.

The U.S. December Services Purchasing Managers’ Index (PMI) preliminary reading was 52.9, below the expected 54. The composite PMI preliminary was 53, lower than the forecast of 53.9. Manufacturing PMI was 51.8, slightly below the expected 52.1. These data, along with employment figures, depict a slowing economic growth picture.

AI Investment Becomes Global Growth Engine

OECD Secretary-General Mathias Cormann stated that surging AI investment is driving global growth. The organization expects continued increases in AI investment and long-term economic benefits through productivity improvements. However, the OECD has downgraded its global economic growth forecast for next year to 2.9%, down from 3.5% this year, warning that the impact of trade barriers has yet to be fully reflected.

U.S.-EU Digital Tax Dispute Escalates

The U.S. government has threatened retaliatory measures against the EU in response to the latter’s digital tax on U.S. tech companies. The Office of the U.S. Trade Representative said that if the EU continues to impose discriminatory measures against U.S. service providers, the U.S. will use all available tools to counter, including taxing foreign services, imposing restrictions, or other measures.

The dispute centers on regulatory differences. The EU is advancing regulation and taxation of U.S. tech giants like Google, Meta, and Amazon, and has already issued hundreds of millions of dollars in fines to Apple, Meta, and Elon Musk’s X. Trump has repeatedly criticized such measures as non-tariff trade barriers harming U.S. companies.

Next Fed Chair Expected to Be Announced in Early January

U.S. Treasury Secretary Janet Yellen indicated that the next Federal Reserve Chair is most likely to be announced by President Trump in early January next year. Yellen said there will be one or two more interviews this week. Trump has been straightforward when asking candidates about Fed policies, structure, and economic outlook.

Yellen also praised the two main candidates—White House National Economic Council Director Jared Bernstein and former Fed Governor Lisa Cook—as highly qualified. Reports suggest Trump will name these two as top contenders next Friday.

Russia-Ukraine Peace Talks Still Distant

Russian Deputy Foreign Minister Ryabkov reiterated that Russia will not make concessions on territorial issues in Donbas, Crimea, Luhansk, Zaporizhzhia, and Kherson. Ryabkov said Russia is prepared for diplomatic agreements, but Kyiv and Moscow still have serious disagreements over territory, security, and Western troop deployments. He emphasized that Russia will not agree to Western deployment of troops in Ukraine in any form. Regarding recent peace negotiations in Berlin between the U.S. and Ukraine, Ryabkov admitted Russia is unsure of the outcome, and finding a truly sustainable solution will take a long time.

Tech Giants’ Movements

OpenAI has hired former UK Chancellor of the Exchequer George Osborne to lead its global “Stargate” expansion efforts, appointing him as Head of OpenAI for Countries. The project is the international version of the $500 billion Stargate initiative. OpenAI has reached agreements with the UK and UAE and is in talks with 50 countries regarding sovereign AI development.

Morgan Stanley expects Tesla’s Robotaxi fleet to expand significantly by 2026. The firm notes that the Austin driverless testing without safety operators is a key validation step. With the achievement of technical and regulatory milestones, and the launch of Cybercab in April 2026, Tesla’s Robotaxi fleet is projected to grow from a few vehicles to about 1,000.

Key Events to Watch

The UK November CPI month-over-month, retail price index month-over-month, and Germany’s December IFO Business Climate Index will be released sequentially. Fed Governors Waller and Williams will deliver speeches. U.S. EIA crude oil inventory data for the week ending December 12 is also noteworthy. Market trends remain uncertain, and investors should closely monitor policy developments and economic data.