Daily Commentary
Commentary prepared by Alloya Investment Services, a division of the wholly owned CUSO of Alloya Corporate Federal Credit Union. Alloya Investment Services is a leading broker/dealer consultant to credit unions.
Friday, December 5, 2025 at 8:00 am CT
Commentary prepared by Tom Slefinger, Market Strategist
Market Indications
Other Market Indicators
| Market Indicators | ||
|---|---|---|
| 2s/5s Tsy Spread | 0.15 | +0.01 |
| 2s/10s Tsy Spread | 0.58 | 0.00 |
| 2s/30s Tsy Spread | 1.24 | +0.01 |
| DJIA-30 | 47,850.94 | -31.96 |
| S&P-500 | 6,857.12 | +7.40 |
| NASDAQ | 23,505.14 | +51.05 |
| Dollar Idx | 99.02 | +0.03 |
| CRB Idx | 303.92 | +1.65 |
| Gold | 4,226.91 | +19.11 |
Daily Commentary
Recap – Equities were essentially unchanged yesterday. The S&P 500 was up 0.1% and the Nasdaq rose 0.2% while the Dow shed 0.1%. U.S. stock market futures are pointing to a modestly positive open. Bond markets are still slightly on the defensive, with the 10-year Treasury yield inching up to 4.11%. The DXY dollar index is steady at just above 99.0, as is Bitcoin (just over $92,000). West Texas Intermediate (WTI) crude sits at $59.00 per barrel. Gold has mustered a +0.4% advance to $4,226 per ounce.
I am not sure anyone realizes that we have reached a point where the share of U.S. equity analysts with either a “sell” or “underweight” recommendation on the stocks they cover is down to 0.5% (tip of the hat to Mike Wilson)! I mean, this is usually a cheery bunch and is typically under pressure from management to toe the line but come on — this is ridiculous!
A day after ADP reported weaker than expected results, Challenger, Gray & Christmas showed layoffs continuing to trend up from last November (24%), though of course lower than October's brutal numbers that included major cuts from Amazon and others.
I also keep hearing that artificial intelligence (AI) has yet to generate cuts to payrolls, but the Challenger data showed that in the six months to November, there have been 54,694 layoff notices due to AI implementation. Tack on another 66,866 from “cost-cutting,” which is indirectly related to the same thing. And another 113,829 firing announcements from “economic conditions,” which ranks as one of the largest six-month tallies of all time.
Source: Bloomberg
At the same time, we received contradictory data, as weekly unemployment claims did not sound any alarm bells. In the week ending November 29, the advance figure for seasonally adjusted initial claims was 191,000, a decrease of 27,000 from the previous week’s revised level. This is the lowest level for initial claims since September 2022 when it was 189,000.
I suspect that the seasonal adjustments are messed up and maybe we have a situation where a wave of severance packages is preventing people from lining up for the unemployment benefits… for now.
Continuing jobless claims continue to oscillate just above 1.9 million.
Source: Bloomberg
While we may not have all the answers we want, the market did take another step toward being even more sure of a rate cut from the Federal Reserve. The futures markets have assigned a 95% probability of a rate cut next week.
Moving on. This isn’t a data point, but it does provide insights into the consumer and overall economy. Have a look at the story in today’s New York Times titled “Shoppers Turn to Discounts and Debt, but Not Just for Holidays”. The tag line says it all:
“Consumers are focusing on value and financing purchases to complete their shopping lists.”
Frugality speaks to the cost-conscious consumer (hardly inflationary), and finance speaks to a lack of real purchasing power stemming from the cooling jobs market (hardly inflationary). I say buy bonds!
What was truly fascinating yesterday was the news out of Dollar General which released terrific sales and profits numbers. The company stressed that its lower-income customers are feeling increasingly strained and are buying fewer items per visit. Purchases are being limited to food and household supplies. The question is what this means for the economy because retailers like Dollar General are a contrary play on gross domestic product (GDP) growth and elevated prices.
Meanwhile, we are living in a K-shaped world. It’s not just the low/mid-end consumer versus the high-end consumer. It also applies to the business sector, where AI related capex is booming while volume spending in the rest of the industrial space is contracting. It pertains to the labor market as well: expanding payrolls at big companies and shrinking headcounts at small firms. The stock market is K-shaped because the concentration is more acute than at any other time in modern history. Finally, there’s a K-shape to the financial markets in general, where we have the 10-year Treasury yield barely above 4.0% and pricing in tepid growth, while the cyclically adjusted price to earnings (CAPE) multiple, at nearly 40x, is discounting an unrelenting AI economic boom. Bizarre!
To end the trading week we now await the dual releases of U.S. consumer spending/personal income/price deflator due at 10:00 am ET.
Stay tuned and have a great day!
Economic Calendar
December 1 - 5, 2025
Future Fed Expectations
Source: Bloomberg
| Select Probabilities based on the Futures | |
|---|---|
| Probability of Fed Funds rate CUT on December 10, 2025 | -96% |
| Probability of Fed Funds rate CUT on January 28, 2026 | -27% |
**All quoted rates are indications and are subject to change without notice.
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