03.12.25 - Slowing job market

The private payroll processor ADP released a weak employment report.

Private-sector employers shed in November. ADP private payrolls had been expected to show a 10,000–40,000 job gain. Instead, the report delivered a 32,000 job decline, compared with forecasts for a modest gain. According to ADP, the decline was driven primarily by a sharp pullback among small businesses, which are typically the first to feel tightening financial conditions.

The next official look at November’s job date will be on December 16 when the Bureau of Labor Statistics releases its delayed employment report for the month.

Markets: try to digest data

• Equities trading sideways to partly loweer

• Bonds: yields mainly lower — 10-year yield at 4.08%

• Gold: higher approaching the USD 4’250/oz

• USD: falls

• Cryptos: sideways after regaining last weeks level with Bitcoin back to USD 92k

• Volatility: VIX unchanged around 16

My View: The narrative is shifting quickly, and not in the way markets hoped. The labour market is no longer just “cooling”. It is flashing some early stress signals, with small businesses showing cracks first. This is typically where broader weakness begins.
Rate cuts driven by economic deterioration are not bullish.

Fed may cut next week, but the motivation matters. Markets still assign an 85–87% probability to a 25-basis-point cut. If the economy is slowing more abruptly than anticipated, the market’s soft-landing conviction becomes fragile.
Markets may not be pricing the “why” behind a December cut. That gap could lead to renewed swings across asset classes.

Attention now turns to privately sourced data on services activity in November for insight into inflation, offering earlier clues on price dynamics. The next official update on consumer prices, the PCE print due Friday, is still catching up on September data and is therefore lagging real-time market conditions.

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