Last week witnessed significant fluctuations in international markets, highlighted by a slight rebound in the U.S. Personal Consumption Expenditures (PCE) price index and the enactment of a ceasefire agreement between Lebanon and Israel. U.S. stock markets continued their recovery, with the Dow Jones Industrial Average rising by 1.39%, the Nasdaq Composite climbing 1.13%, and the S&P 500 advancing 1.06% for the week. Meanwhile, the three major European indices exhibited mixed results: the UK's FTSE 100 increased by 0.31%, the German DAX 30 gained 1.57%, while France's CAC 40 saw a decline of 0.27%.

This week is set to spotlight pivotal economic data, particularly the key employment statistics for November, along with the ISM manufacturing and services activity surveys, which serve as vital indicators for the U.S. economy. As regional economies exhibit signs of fatigue, comments from European Central Bank (ECB) President Christine Lagarde may influence any future interest rate cuts. Furthermore, geopolitical factors continue to pose potential risks to market stability.

The focus of the upcoming U.S. nonfarm payroll report will be whether there will be a rebound. Following the October PCE data meeting expectations, futures tracking the federal funds rate indicated that the likelihood of a 25 basis point rate cut in December rose to approximately 70%.

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In the course of the next week, numerous Federal Reserve officials will address the public, offering insights into the latest economic conditions and monetary policy. Among them, Fed Chairman Jerome Powell is expected to participate in a forum organized by local media in New York City. Additionally, the Fed will release its Beige Book, providing a qualitative assessment of economic conditions across the country.

Data-wise, the upcoming nonfarm payroll release has captured garnering attention. October saw an addition of a mere 12,000 jobs, reaching the lowest level since 2020. Analysts warn that such figures may reflect distortions due to prior hurricanes and strikes; however, with a return of workers to their positions, forecasts suggest a significant rebound in the latest measure potentially reaching 200,000, while unemployment may remain at 4.1%. Before the nonfarm report is issued, JOLTS job vacancies for October and the ADP’s November private payrolls are expected to provide further insights into the performance of the U.S. labor market.

Moreover, the ISM manufacturing and services indices will be closely monitored, as they will reflect the health of the U.S. economy in the mid-fourth quarter, particularly against a backdrop of weaker performance in the eurozone. Due to higher-than-expected inflationary pressures in October, the market will seek signs in the price components of the PMI to ascertain whether the stickiness of inflation continues into November.

As the inauguration date approaches, investors will be vigilant for any further comments regarding trade tariffs and other policy initiatives.

In the realm of corporate earnings, noteworthy companies to watch this week include Salesforce, Mellanox Technologies, and retailers like Dollar Tree and Kroger, who will offer their insights on the holiday season outlook.

In commodity markets, international oil prices saw a rebound following the establishment of a ceasefire agreement supported by Israel and Iran-associated Hezbollah, easing concerns over potential threats to oil supply. The West Texas Intermediate (WTI) crude oil contract fell by 4.55% for the week, settling at $68.00 per barrel, while the Brent crude oil contract declined by 2.97% to $72.94 per barrel.

OPEC announced a delay of its scheduled weekend meeting to December 5, as several ministers must attend the 45th Gulf Summit in Kuwait City. There is widespread consensus that the organization will announce a postponement in its plans to begin unwinding production cuts. Barbabr Lambrecht, a commodity strategist at Deutsche Bank, observed in a report, “There are scheduling discrepancies, indicating that there may be difficulties in establishing a unified production strategy, which we suspect relates more to quotas than to overall strategy.”

The OPEC+ group had initially planned to start gradually easing a daily reduction of around 2.2 million barrels in October but later postponed it to December 1. Earlier this month, the alliance also agreed to delay any production increases until late December. Deutsche Bank reiterated its previous position that OPEC+ may delay increases for at least three months, or else the oil market could face a significant oversupply risk.

On the gold market front, international gold prices experienced their largest monthly decline since September of the previous year, prompting a sell-off. November delivery COMEX gold contracts were quoted at $2,657 per ounce, reflecting a weekly drop of 2.04%, with a cumulative decline of over 3% in November.

The U.S. Dollar Index increased by 2% in November, intensifying expectations for significant fiscal spending and higher tariffs, which could incite inflation and prompt the Fed to adopt a cautious approach regarding further rate cuts.

Jim Wyckoff, a senior market analyst at Kitco Metals, indicated uncertainty surrounding the implementation of proposed tariffs. However, this uncertainty, coupled with concerns about slower economic growth due to tariffs, may inadvertently favor the gold market from a safe-haven perspective. Ole Hansen, head of commodity strategy at Saxo Bank, reported, “Sustained global uncertainties continue to drive demand for gold as a safe-haven asset.”

As Lagarde speaks, market participants are keen to decipher any signals she may give regarding future monetary policies. The European Commission's autumn financial plan released on the 26th highlighted issues of excessive fiscal spending or over-deficit concerns in several EU member nations. This assessment focused on net expenditure growth for budget proposals submitted by 17 eurozone members while scrutinizing whether this spending exceeded predetermined limits. Findings suggest that countries like Germany, Austria, and the Netherlands, impacted by COVID-19, are witnessing sluggish economic recoveries, making it challenging to keep expenses at lower levels. Both Germany and the Netherlands are projected to exceed their expenditure limits.

Overall inflation in the eurozone has risen as anticipated, from 2.0% to 2.3%. However, the latest PMI data fell short of expectations, indicating risks of economic cooling. ECB Governing Council member Isabel Schnabel made hawkish comments, suggesting that any rate cuts should be gradual. Market pricing in rate futures indicates a 20% probability of another 50 basis points cut by the ECB on December 12.

Looking ahead, all eyes are on Lagarde's address to the European Parliament's Economic and Monetary Affairs Committee, where investors will be scrutinizing her remarks for further clues regarding the direction of interest rates.

In terms of data, final manufacturing and services PMI for November will be of interest, with HSBC noting that Germany's manufacturing orders and industrial output for October are expected to present mixed results, reflecting an alarming trend of weakness. “German industry is still under immense pressure to adapt to evolving structural conditions,” the report claimed.

The Bank of England cautioned last week that investor skepticism regarding the sustainability of rising government debt might heighten global borrowing costs and engender financial market volatility. Recent stress tests revealed that the UK banking system could survive a severe global economic recession, faring better than when the unexpected large-scale tax cuts at the end of 2022 rocked the government bond market.