Jobs Data Could Jolt US Stocks From Holiday Calm As 2026 Kicks Off

Forex

Economic

Summary:

The first full trading week of the new year could shake the US stock market out of its winter holiday slumber as the monthly jobs data headlines a busy start to 2026 for investors.

Stocks slid in the final session of 2025, with the benchmark S&P 500 falling into a monthly loss for December. But the index still climbed more than 16% in 2025, its third straight year of double-digit percentage gains, while the Cboe Volatility index was last just above its lows for the year.

Trading volumes were thin at the end of 2025, but the new year could get off to an eventful start. Aside from economic data, investors await a US Supreme Court decision on President Donald Trump's tariffs along with his choice of a new Federal Reserve chair, and US corporate earnings season is around the corner.

While the S&P 500 is near record highs, it is also around the same level it was in late October, noted Matthew Maley, chief market strategist at Miller Tabak.

"The market is looking for direction," Maley said. "We break out of these ranges and that's going to give either people a lot of confidence or a lot of concern depending on which way it breaks."

Jobs data could send rate signals

The employment data due on Jan 9 could provide a jolt either way. Concerns over weakness in the labour market prompted the Fed to lower interest rates at each of its last three meetings of 2025, as the US central bank juggles its goals of full employment and contained inflation.

Lower rates have supported equities, but the extent of further cuts in 2026 is unclear. Fed officials were divided over the path for monetary policy at the most recent meeting in December. Inflation remains above the Fed's 2% annual target.

With the benchmark rate at 3.5%-3.75%, Fed funds futures suggest little chance of a cut at the next meeting in late January, but nearly a 50% chance of a quarter-point reduction in March.

"The fact that there has been softening in the labour market has really given the Fed good cover to change their outlook about reducing rates," said Eric Kuby, chief investment officer at North Star Investment Management in Chicago.

At the same time, investors are also wary that an overly weak report could signal more severe economic concern than markets currently anticipate.

Employment for December is expected to have climbed by 55,000 jobs, according to a Reuters poll. Payrolls rose by 64,000 in November, but the unemployment rate was 4.6%, a more than four-year high.

"If (employment) starts turning down in any kind of meaningful way, that's going to signal that the recession is a lot closer than people think," Maley said.

Inflation, 4Q earnings also loom

Other data next week includes manufacturing and services sector activity, along with job openings and other labour market data. Economic releases are returning to more normal schedules following the 43-day government shutdown that delayed or cancelled many key reports.

A closely watched report on inflation trends, the monthly US consumer price index, is due out on Jan 13.

"Anything that has to do with underlying economic activity and inflation is really going to catch the market's attention," said Scott Wren, senior global market strategist at Wells Fargo Investment Institute, adding that a backdrop of modest economic growth and moderating inflation is "a good environment for stocks and for risk assets in general".

Investors will be gearing up for fourth-quarter earnings season, with results from JPMorgan on Jan 13, along with other major bank reports that week.

With stocks trading at historically lofty valuations, investors are banking on strong earnings growth. Overall S&P 500 company earnings are expected to have climbed 13% in 2025, with another 15.5% rise in 2026, according to LSEG IBES data.

"To make an investment case for the S&P 500 at current levels, one must believe in some combination of good/very good earnings growth and continued investor confidence in economic conditions and macro policy," said Nicholas Colas, co-founder of DataTrek Research, in a research note.

Source: Theedgemarkets

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Economic

Commodity

Aluminum Breaks $3,000 Barrier as Global Supply Tightens

Aluminum futures surged past the $3,000 per ton mark for the first time in over three years on Friday, driven by growing concerns over constrained global supply and long-term demand optimism. The metal, which gained 17% in 2025 its strongest annual rally since 2021 continues to ride a wave of positive sentiment across the broader base metals sector.

The rally reflects structural supply limitations. In China, a cap on smelting capacity continues to restrict domestic output. Meanwhile, elevated energy prices in Europe have reduced production incentives, putting further pressure on global inventories. These supply-side constraints come just as demand from the construction and renewable energy sectors remains resilient, helping fuel speculative and strategic positioning in the futures market.

Copper, Nickel Join the Rally Amid Broad Metal Tightness

Aluminum wasn’t the only metal making headlines. Copper, the star performer among the six major London Metal Exchange (LME) industrial metals in 2025, resumed its climb after slipping 1.1% in the prior session. At $12,487 per ton, it’s up 0.5% on the day, continuing a year-end surge that saw the red metal reach multiple all-time highs.

Copper’s rise is largely attributed to a string of global supply disruptions. Major mines across Indonesia, Chile, and the Democratic Republic of the Congo faced accidents and operational delays throughout 2025. At the same time, trade tensions, particularly tariff-related concerns, led to a shift in shipments toward the U.S., amplifying tightness in available supply elsewhere.

Nickel also jumped, up 1.2% to $16,845 per ton. This followed an announcement by PT Vale Indonesia halting mining operations due to delayed approval of its 2026 work plan. While the company assured markets that operations remain sustainable and that approval is expected shortly, the delay stirred supply-side anxiety especially after Indonesia signaled plans to reduce national nickel output this year. December marked nickel’s strongest monthly gain since April 2024.

Iron Ore Steadies, Chinese Markets Remain Closed

Iron ore futures in Singapore rose modestly by 0.3% to $105.65 per ton. With Chinese markets closed for a public holiday, trading remained subdued, though sentiment continues to be supported by steel-sector restocking and hopes for construction stimulus from Beijing once markets reopen.

The breach of the $3,000/ton level by aluminum underscores growing investor conviction that supply constraints and long-term green infrastructure demand will continue to tighten industrial metal markets in 2026. From copper’s end-of-year rally to nickel’s sudden supply scare and aluminum’s upward breakout, the trend is clear: industrial metals are back in the spotlight.

With energy transitions, global infrastructure upgrades, and geopolitical supply vulnerabilities all converging, base metals appear poised to extend gains provided macroeconomic risks or demand shocks don’t derail momentum. Traders and manufacturers alike are watching closely for signals from China, Indonesia, and the U.S. that could either confirm or challenge this bullish trajectory.

Source: Bloomberg

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Economic

Treasuries Rally as Market Eyes More Rate Cuts in 2026

U.S. Treasuries continued their upward trajectory on the first trading day of 2026, building on their strongest annual return in five years. The benchmark 10-year yield dropped two basis points to 4.15%, while the 30-year yield slipped by one basis point to 4.84%, reversing earlier gains seen in morning trading.

This rally comes after a Bloomberg index tracking Treasuries posted a return exceeding 6% in 2025 the best since the pandemic-driven surge in 2020. The gains were supported by softening inflation pressures, a shift in Federal Reserve tone, and a sharp decline in bond market volatility, which has now fallen to its lowest level since early 2022.

Fed Outlook Drives Bullish Sentiment Despite Mixed Data

Investors are entering 2026 with strong conviction that more interest rate cuts are on the horizon, especially amid speculation that President Donald Trump will appoint a more dovish successor to Fed Chair Jerome Powell, whose term ends in May. This expectation serves as a key driver behind the demand for longer-dated Treasuries.

However, this outlook is being tested by economic fundamentals. Data released last week revealed that the U.S. economy expanded at its fastest pace in two years, raising questions about whether the Fed will act as swiftly or as deeply as markets anticipate. The disconnect between growth momentum and policy expectations introduces a degree of fragility to the Treasury rally, suggesting that incoming data could sharply alter the market’s course.

The release of the S&P Global U.S. Manufacturing PMI later on Friday is among the first data points likely to test this narrative, with further labor market and inflation readings expected in the coming weeks.

Global Bond Markets Show Divergence as U.S. Leads

While U.S. yields fell, global bond markets moved in the opposite direction. Germany’s 10-year bund yield rose as much as six basis points to 2.91% before paring gains, while the UK’s 10-year gilt yield climbed five basis points to 4.53%. These moves reflect a catch-up in trading activity, as European markets reopened following the New Year’s Day holiday and responded to earlier U.S. developments.

Australian bonds lagged most, with yields on three- and 10-year notes rising about nine basis points. This was partially driven by renewed speculation around rising commodity prices, which could reignite inflationary concerns in resource-heavy economies like Australia.

Issuance Calendar and Technicals to Play Key Role in January

January is traditionally a heavy month for bond issuance, and the resulting supply pressures could exert upward force on yields. Investors may require higher returns to absorb the influx of new government and corporate debt, which could temporarily dampen the rally unless balanced by continued dovish signals from the Fed or disappointing macroeconomic data.

U.S. Treasuries have entered 2026 with solid momentum, but whether that performance can be sustained will depend on a delicate balance between market expectations for rate cuts and the actual resilience of the U.S. economy. For now, bond markets are leaning into a dovish pivot but any surprises in inflation, labor, or leadership at the Fed could quickly test that assumption.

With Powell’s tenure winding down and Trump poised to reshape central bank leadership, Treasuries are not just a barometer of rate expectations they’re also a reflection of deepening uncertainty about how U.S. monetary policy will be shaped in a pivotal election year.

Source: Bloomberg

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Economic

Majority of Americans Face a Retirement Readiness Gap

Despite the growing emphasis on long-term financial planning, a sobering new report by Vanguard reveals that fewer than half of U.S. retirement savers are adequately prepared to maintain their current lifestyle after exiting the workforce. The findings highlight a widening readiness gap one exacerbated by rising living costs, inconsistent saving habits, and uneven access to employer-sponsored retirement plans.

Older Gen Z workers (ages 24–28) currently exhibit the strongest trajectory, with 47% expected to maintain their lifestyle in retirement. This percentage drops with each older generation: 42% for Millennials, 41% for Gen X, and only 40% for younger Baby Boomers. While homeownership among Boomers (nearly 90%) offers some buffer through home equity, it does not replace the need for sufficient cash flow during retirement years.

The disparity reflects more than just age differences it indicates a cause rooted in access to defined contribution plans, early savings discipline, and structural changes in retirement benefits over time. Workers with access to defined contribution plans like 401(k)s or 403(b)s are twice as likely to meet their retirement goals compared to those without such plans.

Why Lifestyle Creep and Inadequate Savings Are a Threat

A key driver behind the shortfall is “lifestyle creep” the tendency to increase spending as income rises. Many Americans build their current lifestyle around higher earnings without proportionately increasing savings. Consequently, when they retire and income drops, the gap between desired and actual post-retirement lifestyle becomes unsustainable.

To mitigate this, financial advisors often recommend accumulating between 10 and 12 times one’s final salary by retirement, aiming to replace around 70%–80% of pre-retirement income. Unfortunately, many Americans fall short of this benchmark, particularly those who delay retirement planning or rely solely on Social Security benefits.

Solutions: From Catch-Up Contributions to Budget Planning

For those still in the workforce especially those approaching retirement there are practical solutions that can improve preparedness:

Delay retirement: Vanguard found that extending work life by even two years can significantly boost the number of individuals able to maintain their current lifestyle. This additional time allows for more contributions, compound growth, and delayed withdrawals.

Maximize employer match: With the median employer match at 4% of salary, workers not taking full advantage are forgoing substantial long-term gains. This match, over years of compounding, can close retirement gaps dramatically.

Make catch-up contributions: Those aged 50 and older can contribute more to retirement accounts. These higher limits offer late savers an opportunity to bridge deficits.

Track spending and adjust expectations: Managing post-retirement expenses is just as critical as accumulating wealth. Budgeting now can help forecast and control spending habits in retirement, from housing and transportation to medical care.

Retirement Isn’t One-Size-Fits-All Adaptability Is Key

Not everyone will reach their ideal savings target by retirement, but adaptability can help maintain financial stability. Downsizing homes, relocating to lower-cost areas, and reducing discretionary spending are common strategies among retirees.

Government programs also offer support for those facing financial strain. Medicare Savings Programs, energy assistance grants, food subsidies, and housing aid all contribute to a basic safety net. Meanwhile, part-time work is becoming increasingly normalized among older adults, with nearly 1 in 5 Americans aged 65 or older working or seeking employment as of 2024.

Retirement readiness is ultimately shaped by early participation in retirement plans, consistent savings, and the willingness to make informed lifestyle adjustments. While current data suggests less than half of Americans are positioned to preserve their lifestyle post-retirement, the tools and resources to change that outcome are widely available particularly for those who act early and often. Whether you're just starting your career or nearing retirement, understanding the variables that impact your financial future is the first step toward bridging the gap.

Source: Investopedia

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Economic

Equity Inflows Surge as AI Optimism and Earnings Outlook Fuel Market Momentum

U.S. investors closed out 2025 with renewed enthusiasm for equities, injecting $16.89 billion into U.S. equity funds during the week ending December 31, according to LSEG Lipper data. This marks the second consecutive week of strong inflows, following a $18.3 billion surge the week before, capping a year defined by a broad rally in tech-driven large-cap stocks and mounting optimism about 2026 earnings.

The S&P 500 advanced 16.39% in 2025, while the Nasdaq soared 20.36%, and the Dow Jones rose 12.97%, marking three consecutive years of gains across the major indexes. Analysts now expect earnings for large- and mid-cap U.S. companies to grow 15.13% in 2026, a notable upgrade from the 12.92% forecast for 2025.

The latest fund flow data reveals a clear investor preference for large-cap exposure. A net $16.87 billion flowed into large-cap equity funds, building on the prior week’s staggering $37.4 billion. These flows appear directly correlated with confidence in mega-cap tech and AI beneficiaries, which significantly outperformed in 2025.

Small and Mid-Caps Lag as Rotation Into Large-Caps Continues

While large-cap funds gained, investors pulled $1.42 billion from small-cap equity funds and $269 million from mid-cap funds during the same period. This divergence reflects both a cause-and-effect relationship and a sentiment shift: as interest rate expectations stabilize and market concentration intensifies, capital is rotating toward more established names perceived as safer and more profitable in an AI-accelerated economy.

The cautious stance toward smaller companies suggests concerns over capital costs, inflation pressure, and limited pricing power factors that disproportionately affect firms with less market share or weaker balance sheets.

Sector Rotation: Healthcare and Financials See Outflows

Sectoral fund flows were largely muted, with total net sales of $116 million for the week. Healthcare and financials bore the brunt of sector-specific selling, facing outflows of $502 million and $290 million, respectively. This could signal early repositioning ahead of 2026 policy or earnings headwinds, as both sectors are sensitive to interest rate movements and fiscal policy shifts.

Investors reversed course on fixed income, pulling $2.09 billion from U.S. bond funds the first weekly outflow in over three months. The most dramatic shift came in short-to-intermediate government and Treasury funds, which saw a $5.43 billion outflow, sharply offsetting the $7.68 billion inflow from the week prior.

This withdrawal likely reflects shifting expectations for the Federal Reserve’s rate policy, especially amid mounting political uncertainty over Fed leadership and possible rate cuts in 2026. Some investors may be taking profits or rebalancing portfolios into riskier assets with higher return potential.

Still, not all segments of fixed income suffered. General domestic taxable fixed-income funds and short-to-intermediate investment-grade funds attracted $1.17 billion and $920 million, respectively, suggesting selective demand for higher-quality corporate debt.

Money Market Funds Attract Defensive Flows

In a parallel move signaling caution, investors poured $83.71 billion into money market funds the largest weekly allocation in four weeks. This defensive positioning indicates that while equity sentiment remains bullish at the top end of the market, many investors are still wary of macroeconomic uncertainties and are parking funds in liquid, low-risk assets.

The final week of 2025 confirms that investors are entering 2026 with a mixed but optimistic posture. Large-cap and AI-related equity allocations remain dominant themes, while selective exits from small-cap equities and U.S. government debt suggest risk-aversion at the margins. The dramatic move into money market funds underscores that liquidity and capital preservation are still top of mind for many.

As the market transitions into 2026, the focus will likely center on corporate earnings, interest rate policy, and the unfolding leadership transition at the Fed. For now, investor flows reflect a balancing act chasing gains where growth appears robust, while hedging against volatility with high-grade debt and cash reserves.

Source: Investopedia

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Stocks

Economic

BYD (BYDDF) met its full-year sales target in 2025 and is expected to have surpassed Teslato become the world's largest electric-vehicle maker, according to company statements and Bloomberg data. The Shenzhen-based automaker delivered 4.6 million vehicles last year, marking a 7.7% increase from 2024 and matching the revised target it set in September. Sales were split almost evenly between fully electric vehicles and plug-in hybrids, while BYD's Hong Kong-listed shares rose as much as 2.3% on the first trading day of the new year, suggesting some near-term investor support despite a more uncertain outlook for China's auto market.

Competitive pressures remain elevated across the sector. Tesla is expected to report fourth-quarter deliveries of about 440,900 vehicles, down 11% from a year earlier, which would put full-year deliveries at roughly 1.6 million and mark a second consecutive annual decline, based on Bloomberg-compiled data. Within China, BYD has faced intensifying competition from Geely Automobile Holdings and Xiaomi, alongside reduced purchase incentives and tighter regulatory oversight. Chief Executive Officer Wang Chuanfu said in early December that BYD's technological edge has narrowed and weighed on domestic sales, though he pointed to potential breakthroughs ahead, citing confidence in the company's 120,000-strong engineering team.

Overseas markets have emerged as a key offset. BYD's international deliveries reached 1.05 million vehicles in 2025, exceeding the company's high-end estimate and helping cushion weakness at home, where passenger EV and hybrid sales fell for an eighth straight month and dropped 37.7% in December. Looking ahead, BYD has set an overseas sales target of between 1.5 million and 1.6 million units for 2026, according to a Citigroup report, while analyst estimates compiled by Bloomberg suggest total sales could rise to 5.3 million units next year. Still, mounting pressure from back-to-back quarterly profit declines and increased scrutiny of discounting practices could shape a tougher operating environment as consolidation across China's EV sector accelerates.

Source: TradingView

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Political

Trump Issues Warning as Iran Faces Widespread Unrest

U.S. President Donald Trump stated early Friday that the United States is prepared to "rescue" Iranian protesters if they are violently targeted by the Islamic Republic's authorities. The remarks, posted on Truth Social, follow the eruption of nationwide demonstrations sparked by Iran's deepening economic crisis, including a record collapse of the rial and surging consumer prices.

“If Iran shoots and violently kills peaceful protesters, which is their custom, the United States of America will come to their rescue,” Trump wrote, adding, “We are locked and loaded and ready to go.”

Though lacking operational specifics, the post represents a provocative rhetorical escalation. Trump’s comments were released around 3 a.m. Washington time late morning in Tehran and were quickly met with condemnation from Iranian officials. Security Council Secretary Ali Larijani warned that the U.S. “should be mindful of their soldiers’ safety,” and cautioned that interference would destabilize the region and harm U.S. interests.

Protests Intensify as Economy Deteriorates

The protests began in response to a collapse in Iran’s national currency, which has exacerbated inflation and economic hardship in a country already reeling under stringent international sanctions. The unrest quickly spread from Tehran to multiple cities across Iran. According to the Associated Press, at least seven people have died in recent clashes between demonstrators and security forces.

President Masoud Pezeshkian attempted to defuse tensions earlier in the week by pledging to revise proposed tax hikes and acknowledging the legitimacy of public grievances. However, the demonstrations have persisted, reflecting broader frustration with governance and the worsening cost-of-living crisis.

This wave of unrest follows previous nationwide protest movements in 2019 and 2022, both of which were met with violent crackdowns by Iranian authorities. Trump’s comments imply a willingness to intervene in a situation that could mirror those earlier crackdowns.

Rhetoric Signals Strategic Shift Amid Broader Iran Tensions

Trump’s warning is notable for its apparent contradiction to his long-standing promise to avoid deepening U.S. military involvement abroad. His statement follows a recent meeting with Israeli Prime Minister Benjamin Netanyahu, during which the two leaders discussed Iran’s nuclear ambitions and regional missile capabilities. On Monday, Trump had already threatened potential strikes against Iranian targets tied to its nuclear program.

Observers see Trump’s recent messaging as part of a broader hardline strategy. His administration previously engaged in direct actions against Venezuela’s regime, including asset seizures and targeted strikes, raising the prospect of similar hybrid tactics being used against Iran.

Iran’s Larijani drew a sharp line in his response, distinguishing between “the stance of the protesting shopkeepers” and “the actions of disruptive actors,” suggesting Tehran may attempt to divide the protest movement rhetorically while preparing a potential response to unrest.

With domestic unrest spreading rapidly inside Iran and the U.S. signaling readiness to act, the stage is set for heightened volatility in the Middle East. While Trump’s remarks may be intended as a deterrent, the lack of clarity about what intervention would entail introduces the risk of miscalculation on both sides. Given the historical pattern of Iranian crackdowns and American reactions, the coming days will likely prove decisive in determining whether this crisis remains internal or spills over into a larger geopolitical flashpoint.