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Markets Steady Near Highs as Traders Price In Fed Rate Cut Next Week

With the November jobs report delayed by the shutdown, investors are relying on conflicting labor signals to gauge a likely quarter-point move.

Overview

  • Fed funds futures imply roughly a near-90% chance of a 25-basis-point cut at the Dec. 9–10 meeting, according to CME’s FedWatch tool.
  • ADP reported U.S. private payrolls fell by 32,000 in November, a surprise drop versus expectations for gains.
  • Weekly initial jobless claims declined to 191,000, the lowest in more than three years, while a Chicago Fed estimate put unemployment near 4.4%.
  • U.S. stocks ended roughly flat and close to record levels as the dollar firmed and the 10-year Treasury yield rose to about 4.11%; Japan’s Nikkei jumped 2.3%.
  • The official November payrolls release is postponed until after the Fed decision, and traders are also watching Friday’s PCE inflation report and reports naming Kevin Hassett as a leading Fed chair contender.