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2025-12-16 18:31:50
[Eurozone Debt Awaits Guidance, Weak PMI and US Non-Farm Payrolls Pull Each Other Together] ⑴ The preliminary Eurozone composite PMI released on Tuesday was weaker than expected, indicating that business activity growth will slow by the end of 2025, with a deeper contraction in manufacturing and a weakening expansion in the service sector. ⑵ Despite this, Eurozone bond yields reacted mutedly, with the German 10-year bond yield holding steady at 2.8475%, as market focus shifted to the later-released US non-farm payrolls report. ⑶ Strategists pointed out that although the data was weaker than expected, the market is currently in "wait-and-see mode," awaiting new clues from the US employment data regarding the Fed's policy path. ⑷ Data released on the same day showed that French private sector business growth nearly stalled in December, with continued political uncertainty dragging down the Eurozone's second-largest economy, and its 10-year bond yield slightly declining. ⑸ German private sector growth slowed for the second consecutive month in December, with stagnant new business inflows and declining manufacturing output putting pressure on the economy. (6) Market attention is highly focused on the upcoming US non-farm payroll data, as it could influence Federal Reserve policy expectations, despite the data's release being delayed due to the government shutdown. (7) Strategists believe that with the Fed's interest rates approaching neutral levels, the threshold for further rate cuts is rising; therefore, the strength of the employment data will have a key impact on interest rate expectations. (8) This week, the market will also see monetary policy meetings from the European Central Bank, the Bank of England, and the Bank of Japan, with the market widely expecting the ECB to maintain its current interest rates.
