Trading and Economics

🇨🇦 Canada 10-Year Bond Yield Pulls Back The yield on Canada’s 10-year government bond eased to around 3.42%, pulling back from its highest since August of 3.47% peak reached on December 9th, as softer domestic price pressures and increasingly dovish expectations for the US Federal Reserve weighed on long-term rates. Inflation data showing headline CPI steady at 2.2% and the trimmed-mean easing to a ten-month low of 2.8% reinforced confidence that price pressures are converging toward the Bank of Canada’s target. Earlier, the BoC’s decision to hold rates at 2.25% and its assessment that policy is “about the right level” curbed expectations for aggressive near-term easing. At the same time, a broad softening in the US policy outlook pressured global yields, as delayed US labor and consumption data signaled a cooling economy, with unemployment rising to 4.6% and retail sales stalling.

Baltic Dry Index Rebounds The Baltic Exchange’s dry bulk index, which tracks rates for vessels transporting dry commodities, snapped its eight-day losing streak on Tuesday, rising 0.5% to 2,204 points, mainly supported by the bigger-size segment. The capesize index, which typically transports 150,000-ton cargoes such as iron ore and coal, was up for a second session, rising 3.1% to 3,834 points, likely tracking higher iron ore prices. Meanwhile, the panamax index, which usually carries 60,000-70,000 tons of coal or grain, retreated for the 14th straight session, dropping 4.1% to its lowest since July 8 at 1,577 points; and the supramax index eased 25 points to 1,335 points.

Gasoline Tumbles to Nearly 5-Year Lows Gasoline futures for delivery in the New York Harbor tumbled below $1.70 per gallon, the weakest level since early 2021, as abundant crude feedstock and heavy refined fuel availability reinforced a deeply oversupplied market. Expectations that the war in Ukraine could move toward an end have raised the prospect of looser constraints on Russian oil flows, further limiting supply risks at a time when global balances are already loose. Elevated output has weighed on prices throughout the year, with OPEC restoring previously idled production and non-OPEC producers, particularly in the Americas, continuing to expand supply, leaving refineries well stocked. At the same time, softer economic signals from China have clouded the demand outlook, while flat US retail fuel consumption has capped seasonal upside. Ample seaborne exports and record-high supertanker availability and rates have facilitated the movement of surplus barrels, keeping physical markets flexible.

🇺🇸 US Business Inventories Edge Up as Forecast US business inventories rose 0.2% month-over-month in September 2025, after remaining flat in August and matching market estimates. Stocks increased 0.5% at merchant wholesalers and 0.4% at retailers, while manufacturers saw a 0.1% decline. On a yearly basis, total business inventories rose by 1.2% in September.

🇫🇷 TotalEnergies SE Stock Price Hits 5-week Low TotalEnergies SE shares decreased to 54.33 EUR, the lowest since November 2025. Over the past 4 weeks, TotalEnergies SE lost 3.79%, and in the last 12 months, it increased 5.24%.

🇬🇧 UK Stocks Extend Losses London's FTSE 100 extended early losses to trade about 0.7% lower around 9,680 on Tuesday afternoon, as traders weighed the latest economic data while also eyeing geopolitical developments. The US jobs report showed the economy added more jobs than expected in November, while the unemployment rate unexpectedly increased, supporting expectations of further Federal Reserve rate cuts. Meanwhile, the UK’s private sector surprised on the upside, expanding for the eighth consecutive month in December and at a quicker pace. Sector-wise, defense stocks saw the biggest losses amid optimism surrounding Ukraine peace talks. Babcock International, BAE Systems and Rolls-Royce Holdings fell 4.4%, 2.7% and 2.2%, respectively. BP shares were also down amid falling oil prices.

FX Updates: Brazilian Real Depreciates by 0.57% Top currency losers are Brazilian Real (-0.57%), Dollar Index (-0.41%) and Indian Rupee (-0.40%). Gains are led by British Pound (0.51%), Polish Zloty (0.46%), New Zealand Dollar (0.41%), Euro (0.40%) and Japanese Yen (0.39%).

🇨🇦 TSX Pressured by Energy Giants The S

🇺🇸 US Service Sector Expansion Slows to Six-Month Low The S

🇺🇸 US Stocks Fall Slightly, Traders Assess Fresh Data Both the S

🇨🇦 Canadian Dollar Tests July Highs The Canadian dollar appreciated toward 1.37 per US dollar, testing its highest levels since July as investors weighed firm domestic fundamentals against a broad softening in the US policy outlook. Inflation data showing headline CPI steady at 2.2% and the trimmed mean easing to a ten month low of 2.8% reinforced confidence that price pressures are converging toward the BoC’s target without forcing an abrupt policy shift. In that context, the Bank of Canada’s decision to hold rates at 2.25% and its view that policy is about the right level tempered expectations for aggressive near term easing. An improving external backdrop, with trade flows tracking a surplus, added further support. In contrast, the US dollar weakened as delayed labor and consumption data pointed to a cooling economy, with unemployment rising to 4.6% and retail sales stalling, prompting markets to price a higher probability of additional Fed cuts in 2026.

🇩🇪 DAX Remains Pressured by Defense Stocks Frankfurt's was 0.5% down around 24,110 on Tuesday afternoon, in line with most European peers, amid continued pressure from defense stocks. Rheinmetall (-5.9%), Hensoldt (-4.7%) and Renk (-3.4%) posted further losses following the latest Berlin talks on ending the war in Ukraine, with negotiators describing the discussions as progress, particularly regarding security guarantees for Ukraine in the event of a ceasefire. On the economic front, manufacturing and services picture worsened across Europe. Meanwhile, investor sentiment in Germany improved more than expected in December, according to the ZEW institute's survey. Across the Atlantic, mixed US labor data reinforced bets of further cuts by the Federal Reserve.

🇨🇳 Alibaba Stock Price Hits 13-week Low Alibaba shares decreased to 148.56 USD, the lowest since September 2025. Over the past 4 weeks, Alibaba lost 5.86%, and in the last 12 months, it increased 70.52%.

Gold Rebounds After Jobs Data Gold rose above $4,320 per ounce on Tuesday to the highest since October to test record highs as renewed safe-haven demand and softer US macro signals offset earlier profit-taking. The delayed US jobs report reinforced signs of labor market cooling, with unemployment rising to the highest since 2021 of 4.6%, while wage growth slowed to its weakest pace in over two years, adding to dovish bets for the Fed. At the same time, mixed retail sales data and continued weakness in regional activity indicators added to concerns about underlying growth momentum, supporting defensive positioning. While optimism around potential progress in Russia-Ukraine peace talks briefly weighed on haven flows earlier in the session, persistent geopolitical uncertainty and steady central bank purchases helped re-anchor demand. Ongoing ETF inflows and a broader shift away from sovereign bonds and currencies continue to underpin prices, while markets await CPI data and further clarity on the Fed’s policy path.

🇲🇦 Morocco Maintains Key Policy Rate at 2.25% The National Bank of Morocco left its benchmark interest rate steady at 2.25% during its regular meeting on December 16, 2025, keeping the same rate for the third consecutive time. Policymakers said the current stance remains appropriate amid ongoing global economic uncertainty and domestic weather risks. They noted that inflation continues to evolve at low levels, driven in particular by the improved supply food products. The annual inflation rate in Morocco slowed to 0.1% in October 2025, the lowest since March 2021, down from 0.4% in September. Inflation is expected to gradually rise toward the price stability objective, from 0.8% this year to 1.3% in 2026 and 1.9% in 2027.

🇺🇸 Dollar Declines to Over 2-Month Lows The dollar index slipped below 98.1 on Tuesday, touching its lowest level in more than two months, as traders continued to bet that the Federal Reserve has room to cut the fed funds rate again next year. The delayed economic data did little to change investor expectations for up to two additional rate cuts in 2026. The jobs report showed the US economy added 64K jobs in November, above the 50K forecast, while the unemployment rate unexpectedly rose to 4.6%, its highest level since 2021, signaling a cooling labour market. Meanwhile, retail sales were flat overall, weighed down by declines at auto dealers and gasoline stations, although spending remained firmer across several other categories. The dollar weakened primarily against the British pound and the Japanese yen, and also edged lower versus the euro. The ECB is expected to keep rates unchanged this week while the BoE is widely anticipated to cut borrowing costs by 25 bps, and the BoJ is set to raise interest rates.

🇧🇷 Ibovespa Retreats Ahead of US Payrolls Data The Ibovespa fell 1% to trade below 161,000 on Tuesday, erasing the previous session’s strong gains, as investors digested the minutes from Brazil’s latest central bank meeting while looking ahead to key US payrolls data. The minutes struck a broadly positive tone but emphasized that inflationary pressures remain adverse, reinforcing caution in local markets. Abroad, investors awaited US labor data for clues on the Federal Reserve’s policy path next year. Petrobras dropped more than 1% as oil prices slid on prospects of a Russia-Ukraine peace deal that could ease sanctions. Utilities also weakened, with Axia down 1%, while banks traded lower, led by Itaú. Other decliners included Ambev, WEG, and Rede D'Or. In contrast, Vale rose 0.6%, supported by higher iron ore prices amid expectations of a restocking cycle at Chinese steel mills ahead of the Lunar New Year.

🇨🇦 Canada Futures Slip Ahead of Key US Jobs Data Futures linked to Canada’s main stock exchange edged lower on Tuesday as investors positioned ahead of a busy slate of US economic data. November nonfarm payrolls will be closely watched for further signs of cooling in the labor market, which has weakened steadily in recent months, ahead of next week’s CPI release. Labor conditions and inflation remain the two key inputs for the Federal Reserve when assessing the timing of interest rate cuts, with softer data reinforcing easing expectations that typically support equities. Meanwhile, falling oil and gold prices weighed on Canada’s commodity-heavy index. Oil slid amid rising optimism around a potential Russia-Ukraine peace deal that could ease sanctions, while gold retreated as investors locked in profits ahead of the data. In other news, enterprise software firm Enghouse reported fourth-quarter revenue below expectations, amid concerns about stretched tech valuations.

🇺🇸 US Futures Waver after Jobs Report, Retail Sales Contracts on the three major US futures hovered near the flatline on Tuesday as traders digested a batch of delayed economic data that did little to alter expectations for the Federal Reserve, with markets still seeing room for at least one additional rate cut next year. The jobs report showed the US economy added 64K jobs in November, above the 50K forecast, while the unemployment rate unexpectedly rose to 4.6%, its highest level since 2021, signaling a cooling labour market. Meanwhile, retail sales were flat overall, weighed down by declines at auto dealers and gasoline stations, although spending remained stronger across several other categories.

🇺🇸 NY Services Activity Contracts Further The Federal Reserve Bank of New York’s general business activity index, which tracks economic activity in New York State and parts of New Jersey and Connecticut, increased to -20.0 in December 2025 from -21.7 in November. Despite the increase, the reading showed that business activity continued to decline significantly in the region’s service sector in December. Employment fell for a fourth consecutive month (-7.4 vs -8.6), and wage growth remained modest (23.7 vs 25.4). Supply availability improved somewhat (-7.4 vs -11.1). Both input price increases (72.1 vs 61.9) and selling price increases (30.5 vs 20.1) picked up. Meanwhile, firms do not expect conditions to improve much in the months ahead. The business climate index drifted down to -44.2 (vs -42.2), suggesting the business climate remained worse than normal.