Market Musings 12/16/2025
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
#Goldilocks Soft Landing hits snag after #LaborMarket Jobs Report with #Inflation looming…
The #LaborMarkets jobs report just threw a wrench into the market’s #Goldilocks soft landing narrative.
The November jobs report came in mixed. Headline payrolls were a bit stronger than expected up 64K. But that number hides a sizable loss in October (down -105K) that wiped out September’s gain.
Meanwhile, unemployment didn’t slow down. It rose to 4.6%－more than expected since September. In other words, #LaborMarkets are weakening making the rosier September report look like an outlier.
We also got October retail sales. Retail spending was essentially flat M/M－slightly below expectations for a little growth. Another datapoint suggesting #ConsumerConfidence demand is slowing alongside #LaborMarkets.
So, what does this mean for markets?
On one hand, investors are starting to question whether the Fed’s pause on #RateCuts may be premature. We’re seeing odds rising for multiple #RateCuts next year and treasury yields are dipping.
On the other hand, softer #LaborMarkets takes some shine off the #Goldilocks soft landing narrative that powered the recent rally. The economy may be slowing faster than markets hoped…
That puts even more pressure on the next data point: Thursday’s CPI #Inflation report.
If #Inflation stays contained, the Fed will have more room to stabilize #LaborMarkets.
However, any sign of #Inflation reaccelerating puts the Fed in a tough spot pitting #LaborMarkets stabilization vs. #Inflation control. And, that’s the real risk: stagflation.
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Original Photo by Pixabay.