Data released from yesterday morning’s massive data dump paints a picture of a gradually cooling economy with mixed signals across sectors. November nonfarm payrolls came in slightly above expectations at +108K, supported by upward revisions to prior months and stronger private payroll gains. However, manufacturing employment continued to contract, and the unemployment rate ticked up to 4.6%, suggesting some softening in labor market conditions. Wage growth moderated to 3.7% year-over-year, reinforcing the trend toward easing inflationary pressures.
On the consumer side, retail sales delivered mixed results, with the headline number coming in flat month-over-month, signaling weaker household demand heading into year-end. Meanwhile, Retail Sales Ex Auto and Gas ticked up by .4% month-over-month, beating economists’ estimates of .2%. Taken together, these indicators point to slowing momentum without an abrupt downturn—a scenario consistent with a soft-landing narrative.
For markets, the combination of modest job growth, cooling wages, and softer retail activity leans dovish for the Fed. While today’s data does not warrant immediate policy action, it strengthens the case for holding rates steady and potentially pivoting toward cuts in mid-2026 if disinflation persists. Treasury yields may drift lower on expectations of a less restrictive stance, while equities could find support from reduced tightening risk despite consumer headwinds.
Markets are mostly unchanged this morning with the yield on the benchmark 10yr note upticking to 4.17%. MBS are flat, post-data while stocks are mixed.
