After posting negative prints in 3 of 6 prior months (Oct. -105k, Aug. -26k, Jun. -13k), U.S. nonfarm payrolls increased 64k in Nov. (vs. +50k est.), while the unemployment rate edged up 10bps to 4.6% (4th straight month of increase and highest since Sep. ’21). Weakness in U.S. labor markets is coming into focus (below chart) and will drive more aggressive Fed easing than consensus now expects.
The Dallas Fed published research on Tuesday suggesting the Fed could more effectively achieve its monetary policy goals by targeting the tri-party general collateral rate (TGCR) rather than the fed funds rate. https://www.dallasfed.org/research/economics/2025/1216-sws-transmit The paper argues that changes in monetary policy (most notably increased implementation of QE) have flooded the financial system and rendered fed funds (rate banks charge one another to borrow reserves) an increasingly low-volume component of the money market sector.
President Trump officially designated the Maduro regime as a “foreign terrorist organization” and ordered a full blockade of sanctioned oil tankers entering or leaving Venezuela. Trump posted “Venezuela is completely surrounded by the largest Armada ever assembled in the History of South America (sic). It will only get bigger, and the shock to them will be like northing they have ever seen before.” WTI rallied 3.2% from a $54.98 Tuesday low (lowest in 5 yrs.) to a $56.74 Wednesday morning high.
Chinese lithium prices soared after the Bureau of Natural Resources of Yichun (major lithium center in Jiangxi province) said it would cancel 27 expired mining permits. The most active lithium carbonate contract on the Guangzhou Futures Exchange closed up 7.6% ($15,416/t).
DXY dollar index +0.4%, spot gold +0.35% and spot silver +3.35% (gold/silver ratio @ 65.5, lowest in 5 yrs.)
Chart of the Week: Trailing 12-mos. payroll growth now measures 0.6% (slowest since Mar. ’21). In past 50 years, this type of weakness has always preceded recession and a spike in unemployment rate.
