US labor market maintains trajectory
The US economy added 178,000 new jobs in November, in line with market expectations, while the unemployment rate dropped to 4.6%, the lowest in nearly a decade. However, average hourly earnings were disappointing, dropping 0.1% in November after rising 0.4% in October. Economists had expected earnings to rise 0.2%. Earlier in the week, the United States reported upwardly revised gross domestic product figures for the third quarter. GDP was revised up to an annual rate of 3.2% while after-tax corporate profits advanced a robust 5.2%, the first rise since late 2014. Solid recent economic data, combined with reflation hopes in the wake of the US election, have pushed US yields significantly higher in the past several weeks. To illustrate the point, the Bloomberg Barclays Global Aggregate Bond Index suffered the worst monthly loss in its history in November, declining 4%.


Global manufacturing sectors rebounding

 Manufacturing purchasing managers’ indices have been showing a broad global turn for the better in recent months. November data showed sizable gains, with PMIs in the US, China and the eurozone all exceeding forecasts. The Institute for Supply Management’s US manufacturing PMI was particularly robust, rising to 53.2 from 51.9. A reading above 50 signals that the sector is expanding.


Italy and Austria head to the polls on Sunday
A referendum on constitutional reform takes place in Italy this Sunday. Prime Minister Matteo Renzi has vowed to resign if the referendum goes down to defeat. Polling ahead of the vote suggests the referendum won't pass, though there are still a large number of undecided voters. A defeat would add momentum to the anti-establishment mood among voters in both the US and Europe. In addition, Austrians return to the polls on Sunday to vote in a long-delayed presidential election between Alexander Van der Bellen, a Green who is running as an independent, and Norbert Hofer of the populist People’s Party. Van der Bellen won a close contest in May, but voting irregularities forced Sunday’s rerun. The stability of the European Union could be called into question if anti-establishment momentum continues to build ahead of key federal elections in the Netherlands, France and Germany in 2017. Thursday, French president François Hollande, whose approval rating stands at just 4%, announced that he will not stand for reelection next year, becoming the first French president since World War II not to seek a second term.


At long last, OPEC agrees on production cut
OPEC leaders met this week in Vienna and agreed to cut production by OPEC members by 1.2 million barrels per day and by 600,000 barrels per day by non-members, including Russia. The deal is the first of its kind in eight years. OPEC hopes the agreement will result in a reduction in inventories over the coming months, which they hope will coincide with a pickup in demand while the production curbs are in place.


Trump taps Wall Street pro for Treasury
President-elect Donald Trump announced he will nominate Steven Mnuchin as treasury secretary. Mnuchin is a former Goldman Sachs executive and hedge fund manager. Tax reform and reducing regulation are high on Mnuchin’s agenda. In addition, Trump nominated financier Wilbur Ross to serve as commerce secretary. Ross said increasing US exports will be his focus, along with negotiating favorable bilateral trade deals.


European economy on the mend
Economic growth in Europe looks to be gathering momentum as unemployment in the eurozone fell below 10% this week for the first time in seven years this week, to 9.8%. In addition to a firm PMI, Germany reported the largest jump in retail sales in five years. Sales rose 2.4% in October compared with September.


US home price index recovers ground lost in bust
The Case-Shiller National Home Price index this week eclipsed the peak it set in July 2006. From that peak to its 2012 trough, the index fell 27.4%. However, the recovery has been uneven across the US, analysts say, and point to median home prices still being about 20% below their 2006 peaks.


Pressure builds on South Korean president to stand down
Facing massive protests as a result of a corruption scandal, South Korean president Park Geun-hye is under intense pressure to end her term early. On Tuesday, Park said she would resign if ordered to by the nation’s parliament.



Trump intervenes to keep Carrier jobs in US
President-elect Trump intervened to keep Carrier Corporation, a subsidiary of United Technologies Corporation, from closing a plant in Indiana and moving its production to Mexico. After the deal, about 1,100 jobs will remain in Indianapolis in exchange for about $7 million in tax incentives from the state of Indiana over the next ten years.


J&J said to up ante for Actelion
Johnson & Johnson, the world’s largest maker of health care products, has increased its $26 billion bid for Switzerland’s Actelion, Europe’s largest biotech company, although the new bid price could not be confirmed, Bloomberg News reported. Negotiations are ongoing over matters including various financial structures that could leave Actelion as a standalone entity.



  • Italy holds a constitutional reform referendum on Sunday, 4 December
  • Austria holds presidential elections on Sunday, 4 December
  • Service sector PMIs are released on Monday, 5 December
  • The United Kingdom releases Q3 GDP figures on Wednesday, 7 December
  • Japan reports Q3 GDP on Wednesday, 7 December
  • The European Central Bank Governing Council meets to set rates on Thursday, 8 December

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