US unemployment rate ticks lower

US nonfarm payrolls rose by 50k in December, below consensus expectations for a 70k rise. The gains in December came largely from jobs in leisure and hospitality, as well as healthcare. The report also showed downward revisions to both the October and November data. Better news was found in the unemployment rate, which fell to 4.4% from 4.5%, after a 232k rise in employment in the household survey. The December print saw markets reducing bets of a rate cut from the FOMC in the late-January meeting, with expectations firmly remaining for a hold.

The provisional January print of the University of Michigan survey showed an improvement in sentiment, rising to a value of 54.0 from 52.9 in December, to reach a four-month high. The uptick in aggregate sentiment was largely driven by a better-than-expected 2.0 point gain in the current conditions index to a value of 52.4. The expectations component rose to a value of 55.0 in December from 54.6 in November. One year-ahead inflation expectations remained steady at 4.2%.

The US Fed announced that it has been served Grand Jury subpoenas by the Department of Justice. The legal action was taken in response to testimony provided by Chair Powell in June 2025 on ongoing renovations to Fed headquarters. Powell responded by stating that “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president”.

Core consumer price inflation in Egypt slowed to 11.8% y/y in December, down from 12.5% in November. On a monthly basis, core CPI rose by 0.2%.

Industrial production in Turkey rose sharply in November, increasing 2.5% m/m, up from -0.7% in October. The uptick was driven by a rebound in manufacturing activity which rose 3.1% m/m, while mining and quarrying fell 4.8%.

German industrial production rose unexpectedly in November, rising 0.8% on a monthly basis, after increasing by 2.0% the month prior. Consensus expectations had been for a 0.7% m/m decline. The better-than-expected gain was largely due to improvements in auto-industry production.

Today’s Economic Data and Events

13:30 EC Sentix investor confidence (Jan)

14:30 IN CPI (Dec): forecast 1.58% y/y

Fixed Income

• Moves in US Treasury yields were mixed on Friday, following the nonfarm payrolls print. The 2yr yield gained just over 4bps to 3.5321%, while the 10yr yield was broadly unchanged at 4.1653%. The moves on Friday left the 2yr yield roughly 6bps higher and the 10yr yield 2.5bps lower over the course of the week.
• European bond yields were broadly lower on Friday, with the 10yr Gilt falling 3bps to 4.373%.

FX

• The US dollar saw further gains on Friday, following the decline in the unemployment rate, with the dollar spot index rising 0.2%. EURUSD declined 0.2% to 1.1637, USDJPY rose 0.65% to 157.89 while GBPUSD fell by 0.3% to 1.3404.
• In emerging economies, the Indian rupee weakened further, with USDINR up 0.2% to 90.165. USDTRY rose by less than 0.1% to 43.0761. In contrast, USDZAR fell 0.2% to 16.4926.

Equities

• US equities gained on Friday, with new all-time highs being achieved. The S&P 500 gained 0.7%, the Dow Jones rose 0.5% and the NASDAQ increased by 0.8%.
• There were also gains for European markets on the day. The Euro Stoxx 50 index rose 1.6%, the FTSE 100 gained 0.8%, the CAC 40 increased by 1.4%, and the DAX rose 0.5%.
• In local markets both the DFM and the ADX fell 0.4%.

Commodities

• Oil prices rose further on Friday, as geo-political tensions remained in focus. Brent futures rose to USD 63.34/b, up almost 2.2% on the day, while WTI rose 2.4% to USD 59.12/b.
• There were broad-based gains in precious metal prices on Friday. Gold was higher by 0.7% at USD 4,509.5/troy oz while silver rose 3.7% to USD 79.86/troy oz.
• Industrial metals also gained on the day, with a 2.2% rise in LME copper and a 3.2% gain in LME nickel.