Bonds & Stocks
Bond traders are favoring short-end Treasuries over longer-dated debt after an unexpected uptick in November unemployment added to mixed signals clouding the outlook of the US economy. The gap between 2- and 30-year yields widened on Tuesday, reflecting ongoing expectations of at least two more Federal Reserve interest-rate cuts next year against a backdrop of resilient inflation and solid economic growth. The so-called curve steepening trade has gained traction since the Fed resumed cutting rates in September, and will be put further to the test when delayed consumer price data for November are released.
Economy
High interest rates and President Donald Trump's trade policies are depressing employment and stalling sales at small businesses. Smallbusiness bankruptcies are ticking up, while loan delinquencies are at multiyear highs, with around 3.2% of small-business loans in default. Economists note a divergence between the fortunes of small and large companies, with small businesses struggling and large companies seeing relentless profit and stock gains.
World
Japan's exports to the US rose for the first time since Donald Trump announced baseline tariffs in early April, helping power the biggest gain in overall exports since February. The report showed exports overall gained 6.1% in November from a year earlier, led by semiconductor parts and medical goods, with shipments to the US and the EU jumping 8.8% and 19.6% respectively. The value of car shipments to America increased 1.5% while the number of exported units jumped by 7.7%, suggesting Japanese automakers are still sacrificing profits by cutting prices to preserve market share.