Investors Wait for Payrolls to Justify Risk Postures: Dec. 15, 2025

Markets started the week on the right foot, but the strong advance in stocks was short-lived as selling pressures hit shares shortly after the opening bell. Investors appear indecisive about making gutsy maneuvers prior to a heavy plate of high-profile economic data starting tomorrow with nonfarm payrolls and retail sales ahead of the CPI. Participants are awaiting those critical numbers to better gauge the path in front of the Fed, on the heels of greater uncertainty regarding which of the two Kevins will serve at the helm of the institution when Chair Powell’s term ends in May. National Economic Council director Hassett’s commanding lead narrowed significantly on Friday when President Trump mentioned that former central bank governor Warsh was the top candidate. Anecdotal evidence also suggests a much tighter race than just a few days ago, as Washington officials worry that Hassett is too close to the commander in chief and has repeatedly voiced an opinion favoring an independent monetary authority that shouldn’t necessarily do what the White House wants. Still, fixed-income watchers see the developments as dovish, with yields and the dollar dropping as a result. Elsewhere, volatility protection instruments and commodities ex-energy are catching bids. Crude oil and natural gas are both sinking on an abundant supply outlook.

Homebuilder’s Outlook Improves Marginally

Homebuilder sentiment improved for the third consecutive month, supported by a modest uptick in transaction momentum and better expectations for the future. Still, the headline December figure of 39 was meaningfully below the positive-negative threshold of 50, although it exceeded the expected 38, which would’ve matched November. The outlook for closings in the present and in the next six months rose from 41 and 51 to 42 and 52, but the traffic of prospective buyers remained flat at an anemic 26. Regional performances were bifurcated, nonetheless, with the Midwest and West increasing from 40 and 34 to 47 and 36, while the Northeast and South sunk from 45 and 37 to 41 and 35.

Past performance does not guarantee future results

Tomorrow’s Payroll Report Could be Pivotal

Tomorrow’s nonfarm payroll report is the top economic print of the month considering that labor fragility has caused the Fed to deliver three consecutive rate cuts. The consensus expects 40k total job additions alongside an unchanged joblessness level of 4.4%, and a result in-line with estimates or slightly weaker can support a year-end rally in stocks and Treasuries alike. But things will get tricky with a number below zero or a figure north of 80k, as those outcomes would likely be considered too cold to bolster corporate earnings or too hot to heighten optimism regarding easing prospects in 2026. Retail sales and the Consumer Price Index will be important as well; however, household spending risk isn’t currently at the forefront for Wall Street while a tolerance of above-target inflation is actually positive for business profitability, which explains why the employment situation is the publication to watch this week. Additionally, though, there are numerous lighter impact reports on deck, like this morning’s homebuilder sentiment, which will be followed later this week by ADP-hiring, regional Fed surveys, Purchasing Manager’s Indices, housing starts, building permits, unemployment claims, the University of Michigan’s confidence gauge and existing home transactions.

International Roundup

China’s Economic Lethargy Persists

Shortly after China reported a record-high year-to-date trade surplus, retail sales, housing prices, industrial production and investment data point to continued economic malaise during November. The following items illustrate this trend:

• While the country has been trying to stimulate domestic demand, retail sales climbed only 1.3% year over year (y/y), decelerating from 2.9% in October and below the economist consensus estimate of 3%.
• House prices in the secondary market slipped 2.4% y/y, a steeper drop than 2.2% in October with a glut of property listings sustaining the sector’s decline. Prices retreated nearly 1% month over month (m/m).
• Industrial production was up 4.8% y/y in November and 6% YTD relative to 2024. However, the results were weaker than the 4.9% and 6.1% prints for October. Economists anticipated a 5% November y/y expansion.
• Fixed investment also weakened, dropping 2.6% y/y. Economists estimated a 2.3% decline following the 1.7% contraction in October.

South Korea Tech Exports Jump

South Korea’s Information and communications technology (ICT) exports climbed 24.3% y/y to $24.3 billion last month with the value of semiconductors shipped abroad jumping 38.6%. Foreign orders for smartphones and the separate communications group, meanwhile, climbed 3.5% and 3.3% and were followed by the computer and peripheral devices category growing 1.9%. Shipments of displays, however, fell 3.7%. At the same time, ICT imports climbed only 2.7%, resulting in a trade surplus of $12.7 billion.

Canada CPI Is Stable

Canada’s Consumer Price Index was up 0.1% m/m and 2.2% y/y in November. The monthly result matched the economist consensus estimate and slowed from 0.2% from October while the annualized print was slightly below the 2.3% median forecast and was unchanged from the preceding period. The core gauge, which strips out items with volatile prices, depicted consumers catching a 0.1% discount relative to October after that latter month experienced a 0.6% m/m cost escalation. Relative to November of 2024, prices were up 2.9%, which matched October’s pace.