TRADING DAY-Payrolls, Fed jitters mount

By Jamie McGeever

ORLANDO, Florida, Dec 15 (Reuters) - Caution weighed on Wall Street on Monday as investors awaited Tuesday's U.S. jobs report, while underlying selling pressure and uncertainty over who will be nominated to replace Federal Reserve Chair Jerome Powell eroded earlier gains in Treasuries.

More on that below. In my chart-based column today, I look at how markets are shaping up as the last full trading week of the year gets underway. Worries over AI and long-term yields dominate the equity and bond landscape, while in FX, China's yuan goes from strength to strength.

If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.

1. Scott Bessent will be the real next Fed chair

2. China's economy stalls in November as calls grow for reform

3. Sterling laps up UK-Japan rate squeeze: Mike Dolan

4. Wild currency swings put emerging markets in the spotlight

5. Old meets new economy: AI boom to supercharge European banks' rally

Today's Key Market Moves

• STOCKS: Wall Street in the red, Nasdaq and Russell 2000 slide most. Asia lower, Kospi -2%; Europe higher, led by financials.

• SECTORS/SHARES: Tech -1%, healthcare +1.3%. Three U.S. sectors fall, eight rise yet indices still end lower. ServiceNow -11.5%, Broadcom -5.5%.

• FX: Chile's peso hits 14-month high on general election but ends -0.5%, one of the day's biggest FX decliners. Bitcoin -3% to $85,000.

• BONDS: Treasury yields down as much as 5 bps earlier. But the move loses steam, yields end only 1-2 bps lower.

• COMMODITIES/METALS: Oil -1%; precious metals rally sharply, lifting platinum to a 14-year high $1,810/oz.

Today's Talking Points

Belated U.S. payrolls release

Official U.S. labor market figures for November will be released on Tuesday, later than scheduled due to the government shutdown, and coming less than a week after the Fed cut rates again but signaled it could be on hold for a while.

As usual, attention will be focused on the two main numbers, but getting a clear read through the jobs market fog will not be easy. The unemployment rate continues to be distorted by unique labor demand and supply issues; and Fed Chair Jerome Powell said last week that average payrolls growth of around 40,000 a month could be overestimated by 60,000. That's to say, the economy may actually be shedding jobs outright.

China alarm bells still ringing

The readout from China's latest monthly 'data dump' is pretty clear - the world's second-largest economy performed worse in November than expected, upping the ante on authorities to do more to boost domestic demand and growth.

But does Beijing have the appetite? Last week's Central Economic Work Conference, a key gathering of the Communist Party to set the 2026 policy agenda, said the global environment is no longer "unfavorable" and indicated budget deficits next year will be kept at "necessary" levels, suggesting little desire for big stimulus. Economists warn more support will be needed.

Year ends with a central bank bang

The final full trading week of the year will be a choppy one for FX, rates and bond traders, as five G10 central banks announce their last policy decisions of 2025 - the monetary authorities of Norway, Sweden, Britain, the euro zone and Japan.

The Bank of England on Thursday and Bank of Japan on Friday could be the highlights. The BoE is set to cut rates by the narrowest of margins - a 5-4 vote, with Governor Andrew Bailey swinging the balance. The BOJ is set to raise rates, with all eyes on the signals Governor Kazuo Ueda sends for next year.

Charting the last full market trading week of 2025

The final full trading week of 2025 is underway, but investors can't start winding down for the holiday season just yet, with artificial intelligence jitters and fiscal woes threatening to spoil the festive cheer.

Wall Street, stung last week by gloomy warnings from tech giants Oracle ORCL.N and Broadcom AVGO.O, remains on edge about the profit-generating capabilities of AI.

And even though the Federal Reserve cut interest rates last week and unveiled a program of large-scale T-bill purchases, long-term bond yields are rising and yield curves are steepening – both inside and outside the United States.

Does that mean investors should give up hopes for a "Santa rally?"

Below are five charts that should give investors a flavor of what this week may have in store.

1. 30-YEAR BOND YIELDS' RAPID RISE

Yields on long-dated bonds around the world are popping higher. The 30-year U.S. yield last week reached 4.8670%, its highest since early September, as it broke convincingly above the 2025 average of 4.77%. Long bonds now have to contend with the prospect of having both a White House seeking to run the economy hot with loose fiscal policy and a dovish-leaning Fed.

Rising long-term yields are not just a U.S. phenomenon. Japan, Britain and Australia have been in the spotlight recently too, with the 30-year German yield last week leaping to its highest point since 2011.

2. YIELD CURVES' STEEP CLIMB

U.S. fiscal concerns and inflation fears – partly reflecting President Donald Trump's trade and tax policy as well as the politicization of the Fed – are resulting in steeper yield curves overall. The two-year/30-year spread is close to reaching its widest level in four years.

Steeper curves are typically seen as a reflection of "normal" economic and financial conditions. But that's not the case when the back end of the bond market is getting crushed by fears that the central bank has taken its eye off the inflation ball.

3. SILVER'S SPECULATIVE SPURT

If you want evidence of a year-end speculative boom, look no further than silver. It's up 30% in the last three weeks. That is remarkable enough, but what this chart from Brent Donnelly at Spectra Markets shows is even more astonishing: an ounce of silver is now worth more than a barrel of U.S. crude oil for the first time ever, apart from when the price of oil futures briefly dropped below zero in April 2020.

4. ORACLE'S BLURRED VISION

In recent months, Oracle has traded more like a "meme" stock than one of the world's biggest companies. Shares rose 36% in a single day in September and last week slid 15% in two days, a magnitude of decline only seen during the pandemic, 2008 and the dot-com crises. Oracle is increasingly becoming a bellwether of investors' broader sentiment about AI – and the current signals aren't looking good.

5. YUAN'S GROWING STRENGTH

The U.S. dollar has held up well in the second half of the year, with the dollar index up nearly 2% in that period. But it has been on a steady downward path against the Chinese yuan. Going into the last full week of the year, this cross rate is at a 14-month low, with the 7.00-yuan barrier in sight.

Given that China's trade surplus just topped $1 trillion for the first time, pressure is mounting on Beijing to allow the yuan to rise further – much further.

What could move markets tomorrow?

• Japan, euro zone, UK, US PMIs (December, flash)

• Germany ZEW sentiment index (December)

• Euro zone trade (October)

• UK employment, jobs growth, wages data (October, November)

• ECB Board Member Pedro Machado speaks

• Bank of Canada Governor Tiff Macklem speaks

• U.S. non-farm payrolls (November)

• U.S. retail sales (November)

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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.