US Jobs Rebound but Unemployment Hits Four-Year High

US job growth rebounded more than expected in November, with nonfarm payrolls rising 64k versus forecasts of 50k following October’s 105k decline, the steepest since late 2020. The October contraction was driven by a 162,000 drop in federal employment tied to deferred resignation offers. Despite the rebound, the unemployment rate climbed to 4.6%, a four-year high, as job seekers faced a more challenging environment. Wage growth slowed notably, with average hourly earnings up just 0.1% m/m below expectations of 0.3%.

UK unemployment hit a nearly five-year high of 5.1% in October, while wage growth excluding bonuses slowed to 4.6%, the lowest since early 2022. Private sector pay fell below 4% for the first time since 2020, and payroll data showed 38k job losses in November. The figures strengthen expectations for a Bank of England rate cut Thursday, with markets pricing in 90% odds of a 25 bps reduction to 3.75%, though economists anticipate a close 5 to 4 decision amid concerns about persistent inflation.

Japan’s November exports to the US rose 8.8% y/y, marking the first increase in eight months and bolstering the case for the Bank of Japan’s widely expected rate hike Friday. Overall exports gained 6.1% y/y, led by semiconductor parts and medical goods, beating economist forecasts as EU shipments surged 19.6%. However, exports to China fell 2.4% amid ongoing diplomatic tensions. Japan posted a USD 2.1bn trade surplus, while its US surplus expanded 11.3% to USD 4.8bn despite President Trump’s tariff measures. Japanese automakers are sacrificing profits to preserve US market share, with car shipment values rising just 1.5% while unit volumes jumped 7.7% in November.

Today's Economic Data and Events

11:00 UK CPI Nov: forecast 3.5% YoY

16:30 US MBA Mortgage Applications

Fixed Income

US Treasuries yields declined marginally following the US jobs reports. Yields on the 2yr UST fell by about 2bps to 3.487% while the 10yr yield was lower by around 3bps to 4.145%.

FX

The US dollar was mixed on Tuesday, with the DXY index slipping by 0.17% to 98.15. Mixed US economic data showing a softening labour market and flat retail sales weighed on the greenback. EURUSD edged lower by 0.05% to 1.1747 while GBPUSD gained 0.35% to 1.3423. USDJPY added 0.33% to 154.72 as markets await the Bank of Japan rate decision later this week. USDCHF edged up by 0.14% to 0.7951.

In commodity currencies, AUDUSD added 0.14% to 0.6632 while NZDUSD was lower at 0.5782. USDCAD edged up by 0.10% to 1.3754.

Equities

US equity markets closed mixed on Tuesday. The S&P 500 fell 0.24% to 6,800.26 while the Dow Jones lost 0.62%, to 48,114.26. The Nasdaq Composite rose 0.23% to 23,111.46.

European equities retreated on Tuesday with the EuroStoxx 50 down 0.3% and the STOXX 600 slipping 0.2%.

Locally, DFM General Index closed higher 0.3% while ADX closed down 0.1%. Saudi’s Tadawul declined 1.3%.

Commodities

Oil prices plunged to their lowest levels since early 2021 as renewed optimism over a Russia-Ukraine peace deal raised the prospect of eased restrictions on Russian oil flows. Brent crude fell 2.7% to USD 58.92/b while WTI tumbled 2.7% to USD 55.27/b.

Gold prices were little changed, slipping 0.06% to USD 4,302.32/oz. Silver fell 0.52% to USD 63.76/oz.