Category: Economy

US Labor Market Shows Continued Weakness as November Job Openings Miss Expectations

Posted on by slightbourne@noblecapitalmarkets.com

The US labor market’s sluggish trajectory continued in November, with newly released government data revealing a sharper-than-expected decline in job openings and historically weak hiring activity. The figures paint a picture of an economy caught in what economists are calling a “no-hire, no-fire” limbo, where employers remain cautious about expansion while largely avoiding layoffs.

According to the Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics, there were 7.15 million job openings at the end of November, falling short of the 7.6 million economists had projected. This marks a continuation of the downward trend in available positions, with October’s figures also revised lower from 7.7 million to 7.45 million. The decline was particularly pronounced in accommodation and food services as well as transportation and warehousing, though construction showed some gains.

The timing of these weakness signals is notable, as November also saw the unemployment rate climb to a four-year high of 4.6%. This combination of rising joblessness and declining opportunities suggests the labor market may be losing momentum more rapidly than many forecasters anticipated.

Perhaps most concerning is the collapse in hiring activity. The hiring rate dropped to just 3.2% in November, marking one of the weakest readings since the Great Recession. Only April 2020, during the depths of the pandemic lockdowns, recorded a lower rate at 3.1%. Heather Long, chief economist at Navy Federal Credit Union, characterized the situation bluntly as a “hiring recession,” noting that virtually no jobs have been added outside the healthcare sector since April.

The data reveals an economy where workers and employers alike are playing it safe. While separations held steady at 5.1 million—unchanged from both October and the previous year—the quits rate rose to 2%. This metric, traditionally viewed as a gauge of worker confidence, suggests employees retain some optimism about finding new opportunities, even as hiring activity stalls.

Not all indicators are pointing downward, however. Data from payroll processor ADP showed private employers added 41,000 positions in December, recovering from losses in the previous month. Bank of America’s internal employment analysis echoed this modest improvement, suggesting that the worst of the labor market slowdown may be behind us. The bank’s institute noted that while the “low-hire, low-fire” dynamic persists, there are signs that the deceleration may have stabilized.

As markets await Friday’s official unemployment data for December, the November figures serve as a reminder of the delicate balance facing policymakers. The Federal Reserve must navigate between supporting a weakening labor market and managing inflation concerns, all while employers demonstrate reluctance to commit to significant workforce expansion.

The coming months will be critical in determining whether this represents a temporary soft patch or the beginning of a more sustained period of labor market weakness.

Long-Maturity Treasuries Slide Into 2026 After Strong 2025 Gains

Posted on by slightbourne@noblecapitalmarkets.com

Long-maturity U.S. Treasuries opened 2026 on a cautious note, following the market’s most robust annual performance in five years. While last year saw substantial gains for government bonds, investors are now recalibrating as the potential for additional Federal Reserve interest-rate cuts raises concerns about inflation and fiscal sustainability.

The 30-year Treasury yield rose roughly two basis points to 4.87%, reflecting modest losses but signaling increased volatility after last year’s record gains. In contrast, shorter-dated Treasuries, which are more directly influenced by Fed policy, remained relatively stable or slightly lower. This divergence continues the trend observed in late 2025, when the Fed cut its target range by three quarter-point moves, leading short-term yields lower while long-term rates were supported by economic resilience and fiscal pressures.

Investor focus has shifted to how a potential new Fed leadership might approach monetary policy. Long-term bond yields face upward pressure not only from prospective rate cuts but also from the U.S. government’s challenging fiscal outlook and signs of continued economic strength. Data released late last year indicated the U.S. economy expanded at the fastest pace in two years, complicating the narrative that rate reductions alone would sustain low yields.

Market participants are also closely watching interest-rate derivatives. Recent trading shows heavy demand for options that protect against the federal funds rate dropping to 0% from its current 3.5% range, while swap contracts suggest a more moderate decline toward a 3% floor by year-end. These instruments highlight investor uncertainty over the Fed’s next moves and underline the tension between potential policy easing and persistent inflation, which remains above the central bank’s 2% target.

Despite these concerns, Treasuries continue to serve a strategic role for investors. Portfolio managers cite historically high stock valuations as a compelling reason to maintain exposure to government bonds, providing a hedge against market corrections. James Athey, a portfolio manager at Marlborough Investment Management, notes that volatility is likely to return to bond markets as investors wrestle with the Fed’s evolving policy stance. This environment may produce short-term swings in long-term yields, even as the overall trend for bonds remains influenced by macroeconomic fundamentals.

Globally, bond markets are experiencing similar pressures. Germany’s 10-year yields climbed six basis points to 2.91%, while the UK’s 10-year yield rose five basis points to 4.53%. In Australia, 10-year bonds slumped as yields jumped eight basis points on speculation that rising commodity prices could accelerate growth and prompt the Reserve Bank of Australia to raise rates. Meanwhile, January marks one of the busiest months for new corporate bond issuance, increasing competition for investor capital and adding another layer of pressure on Treasury prices.

Looking ahead, Treasuries are expected to remain a key tool for risk management, particularly for investors balancing exposure to equities and small caps. While the bond market’s exceptional 2025 performance sets a high bar, 2026 may bring more volatility and narrower returns, underscoring the importance of strategic positioning across maturities.

2025 Year-End Wrap: Small-Cap Investors Eye Mining, Biotech, and Tech for 2026 Opportunities

Posted on by slightbourne@noblecapitalmarkets.com

As 2025 comes to a close, the investment landscape has offered a year of contrasts. Mega-cap tech stocks dominated headlines, driven by artificial intelligence and cloud computing, while the small-cap sector faced a challenging environment, weighed down by elevated interest rates, cautious credit markets, and selective investor demand. Yet for those focused on quality small-cap companies, the year also laid the groundwork for potential gains in 2026, particularly in mining, biotech, and technology sectors.

The Russell 2000, a key small-cap benchmark, lagged behind the broader S&P 500 in 2025. Despite underperformance, this divergence has created opportunity. Valuation gaps between small caps and large caps widened, offering investors attractive entry points in companies with strong fundamentals. Small-cap stocks with solid balance sheets and consistent cash flow outperformed peers reliant on speculative growth or cheap capital.

Certain sectors stood out for resilience and growth. Mining and natural resources small caps benefited from ongoing global demand for metals and energy transition materials. Lithium, copper, and critical minerals companies were particularly well-positioned as governments and private companies accelerated clean energy initiatives. These companies not only captured investor interest but also provided a hedge against inflation and volatility in broader equity markets.

The biotech sector saw selective strength as well. Smaller firms focused on innovative therapies, AI-assisted drug discovery, and niche medical devices attracted attention despite macroeconomic headwinds. With continued demand for breakthroughs in personalized medicine, gene therapy, and diagnostic technology, biotech small caps offered a combination of growth potential and sector tailwinds. Investors increasingly favored companies demonstrating revenue traction or near-term product catalysts over speculative pipeline stories.

Technology-focused small caps, including niche AI, cybersecurity, and software-as-a-service providers, also experienced renewed interest. While mega-cap tech firms dominated headlines, small-cap innovators positioned in AI infrastructure, enterprise solutions, and specialized tech services saw capital flow in. These companies benefited from both secular growth trends and attractive valuations relative to large peers, making them a compelling segment for investors looking to balance growth with risk management.

Looking ahead to 2026, the outlook for small-cap equities appears cautiously optimistic. Analysts expect stabilization in interest rates, improving liquidity conditions, and renewed investor rotation from high-valuation mega caps into undervalued small caps. Investors are likely to focus on quality, balance sheet strength, and exposure to durable economic trends, particularly in mining, biotech, and technology. These sectors are well-positioned to capture structural tailwinds, whether from AI adoption, healthcare innovation, or energy transition.

While selectivity will be critical, the combination of lower valuations, sector-specific growth opportunities, and improving market sentiment provides a favorable backdrop for small-cap investors. Those disciplined in stock selection and sector focus may find meaningful upside potential as the market moves into 2026.

In summary, 2025 highlighted the challenges of small-cap investing but also underscored key opportunities. Mining, biotech, and technology sectors emerged as standout areas, offering both resilience and growth potential. As investors enter 2026, the small-cap space remains a fertile ground for disciplined, research-driven investment strategies.

Why Elevated U.S. Tariffs Are Becoming a Long-Term Reality — and What It Means for Small-Cap Stocks

Posted on by slightbourne@noblecapitalmarkets.com

U.S. tariff policy has undergone a dramatic transformation in 2025, reshaping the economic backdrop that investors will carry into the new year. Average tariff rates that once hovered near historic lows have surged above 15%, marking one of the sharpest shifts toward protectionism in decades. As 2026 approaches, market analysts widely expect these levels to remain largely intact, creating a new operating environment for companies—especially small-cap firms that are more sensitive to input costs and domestic demand.

Policy expectations across Wall Street suggest that the current tariff framework is no longer temporary. Multiple economic models now assume an average tariff rate near 15% through at least the first half of 2026. While limited exemptions may be granted on select goods, few observers see a broad rollback on the horizon. The implication is that businesses, investors, and consumers must adjust to tariffs as a structural feature of the U.S. economy rather than a short-term negotiating tactic.

Legal challenges to the administration’s authority to impose sweeping tariffs could introduce volatility, but most experts believe these efforts will not materially change the outcome. Even if courts restrict certain tariff powers, alternative statutory tools remain available to maintain similar rate levels. For markets, this means that any legal disruption is likely to be brief and tactical, not transformational.

Political incentives further reinforce the durability of current tariff policy. Trade protection has become a cornerstone of the administration’s broader economic agenda, tied to reshoring manufacturing, strengthening supply chains, and generating government revenue. Tariff collections in 2025 have already reached historically high levels, strengthening the case for maintaining the policy despite concerns over rising costs.

For small-cap companies, the persistence of elevated tariffs presents a mixed picture. On one hand, firms that rely heavily on imported inputs face margin pressure as higher costs work their way through supply chains. Many companies were able to temporarily cushion the impact by building inventory ahead of tariff increases, but those buffers are now thinning. As restocking occurs at higher tariff rates, pricing decisions will become more difficult—particularly for smaller businesses with limited pricing power.

On the other hand, small-cap stocks with domestic production, localized supply chains, or exposure to U.S. manufacturing could benefit from a more protected competitive landscape. Tariffs may reduce foreign competition in certain sectors, allowing domestic players to capture market share or stabilize pricing. For investors focused on small caps, this dynamic makes sector selection increasingly important.

Looking ahead, 2026 is shaping up to be the year when the economic consequences of tariffs become more visible. While some easing could occur around politically sensitive consumer goods, analysts do not expect a meaningful decline in overall rates. Instead, the emphasis is likely to shift toward managing the downstream effects on inflation, corporate earnings, and consumer spending.

For small-cap investors, clarity may be the most valuable takeaway. With tariff policy appearing set for the foreseeable future, markets can move past speculation and focus on fundamentals. Companies that adapt efficiently—by reshoring production, renegotiating supplier contracts, or passing through costs strategically—may emerge stronger. In a higher-tariff world, resilience and adaptability could become defining traits of the next generation of small-cap winners.

Homebuyer Momentum Builds as Pending Home Sales Record Biggest Monthly Jump Since Early 2023

Posted on by slightbourne@noblecapitalmarkets.com

The U.S. housing market showed renewed signs of life in November as pending home sales posted their strongest monthly increase in nearly two years. New data from the National Association of Realtors reveals that contract signings rose 3.3% compared with October, far exceeding expectations and signaling that buyer activity may be stabilizing after a prolonged slowdown.

Pending home sales are considered a leading indicator for the housing market because homes typically go under contract one to two months before a sale is finalized. The November increase pushed the Pending Home Sales Index up to 79.2, a notable improvement even though the reading remains below the long-term benchmark of 100, which reflects average activity levels in 2001. Compared with November of last year, pending sales increased 2.6%, suggesting demand is gradually recovering.

One of the most important drivers behind the uptick in housing activity has been improving affordability. Mortgage rates have eased from their recent highs, providing relief to buyers who had been priced out of the market. The average rate on a 30-year fixed mortgage has hovered near 6.2% in recent months, down from approximately 7% earlier in 2025 and well below levels seen during the summer. Even modest declines in interest rates can significantly reduce monthly mortgage payments, encouraging more buyers to re-enter the market.

Slower home price growth has also contributed to rising buyer confidence. After years of rapid appreciation, price gains have moderated across much of the country, helping incomes catch up with housing costs. At the same time, wage growth has remained relatively strong, further supporting affordability and boosting purchasing power.

Regionally, pending home sales rose across all parts of the United States in November. The West recorded the largest month-over-month increase at 9.2%, reflecting strong pent-up demand in markets that were previously among the most constrained by affordability challenges. Gains in the Midwest, South, and Northeast suggest the recovery is becoming more evenly distributed rather than concentrated in isolated markets.

Inventory levels, while still tight by historical standards, have improved compared with last year. More homes available for sale have given buyers greater flexibility and reduced competitive pressures that previously discouraged many from making offers. This gradual improvement in supply has helped support the rise in contract activity without reigniting runaway price growth.

Despite the positive momentum, the housing market remains in a fragile recovery phase. Overall home sales in 2025 are still expected to rank near three-decade lows, underscoring how deeply elevated interest rates disrupted activity over the past several years. Many homeowners remain reluctant to sell because doing so would mean giving up ultra-low mortgage rates secured before 2022.

Looking ahead, housing market forecasts suggest a slow and uneven normalization rather than a sharp rebound. Continued declines in mortgage rates, steady wage growth, and incremental improvements in inventory will be critical to sustaining buyer demand. November’s surge in pending home sales does not mark a full recovery, but it does indicate that homebuyer momentum is building and that the long housing slowdown may be starting to ease.

This combination of improving affordability, stabilizing prices, and renewed buyer interest positions the housing market for a potentially stronger 2026 if current trends continue.

Stock Market Today: S&P 500 Sets New 2025 Record as Wall Street Extends Winning Streak

Posted on by slightbourne@noblecapitalmarkets.com

U.S. stocks closed higher on Tuesday, pushing the S&P 500 to a fresh all-time high and extending Wall Street’s winning streak to four consecutive sessions, as investors looked past stronger-than-expected economic data and adjusted expectations around interest rate cuts.

The S&P 500 rose 0.46% to a record close of 6,909.79, marking its latest milestone in 2025. The tech-heavy Nasdaq Composite added 0.57%, while the Dow Jones Industrial Average gained a more modest 0.16%. The steady advance comes as equities rebound from recent volatility, with markets finding renewed momentum heading into the final trading days before the Christmas holiday.

Tuesday’s rally unfolded despite data showing the U.S. economy grew at a surprisingly robust pace over the summer. According to the first read on third-quarter gross domestic product, the economy expanded at a 4.3% annualized rate—well above the 3.3% economists had expected. The report, delayed earlier by government shutdown disruptions, also highlighted resilient consumer spending, reinforcing the view that economic activity remains strong even as borrowing costs stay elevated.

That strength prompted traders to dial back expectations for near-term interest rate cuts. Markets are now pricing in more than an 85% probability that the Federal Reserve will leave rates unchanged at its January meeting, up from roughly 75% just a week ago. While investors still anticipate two rate cuts by the end of next year, the timing appears less certain as economic data continues to show resilience.

Adding nuance to the outlook, December consumer confidence data from the Conference Board showed sentiment falling for a fifth straight month. The decline underscores a disconnect between hard economic data and consumer perceptions, suggesting households remain uneasy about inflation, interest rates, and the broader cost of living despite strong growth figures.

Beyond equities, commodities were a major highlight. Gold and silver prices continued their powerful rally, putting both precious metals on track for their strongest annual performance in more than 40 years. Copper also surged to a new record above $12,000 per ton, reflecting ongoing demand tied to infrastructure spending, electrification, and global supply constraints.

Corporate news added to the bullish tone. Shares of Novo Nordisk jumped after the Danish pharmaceutical giant received official U.S. approval to market its Wegovy weight-loss drug, reinforcing investor enthusiasm around the booming obesity treatment market. In the technology sector, megacap names led gains, with semiconductor stocks climbing and artificial intelligence heavyweight Nvidia helping lift the broader Nasdaq. Alphabet shares also advanced, contributing to the tech sector’s leadership.

Looking ahead, trading volumes are expected to thin as markets head into the holiday break. U.S. stock markets will close early on Wednesday and remain shut on Thursday for Christmas. Still, with the S&P 500 at record highs and investor optimism returning, attention is turning to whether a traditional “Santa Claus rally” could carry stocks into the new year, even as questions around interest rates and economic momentum remain firmly in focus.

November Jobs Report Signals Labor Softening—but Leaves the Fed on Hold

Posted on by slightbourne@noblecapitalmarkets.com

The November jobs report offered fresh signs that the U.S. labor market is cooling, but not enough to materially alter the Federal Reserve’s near-term policy outlook. While the data points to slower hiring and a higher unemployment rate, policymakers and economists broadly agree that the figures fall short of triggering an immediate shift toward additional rate cuts.

According to the latest report, the U.S. economy added 64,000 jobs in November, a modest rebound after a net loss of 105,000 jobs in October. At the same time, the unemployment rate rose to 4.6%, its highest level in more than four years. Under normal circumstances, a jump of that magnitude might raise alarms at the Fed. This time, however, the context surrounding the data matters just as much as the headline numbers.

Economists caution that recent employment figures may be distorted by technical and temporary factors, including the lingering effects of the government shutdown that spanned October and part of November. The Labor Department itself flagged higher-than-usual uncertainty in the data, citing lower survey response rates, changes in weighting methodology, and the use of a two-month analysis window instead of a single month. These quirks make it harder to draw firm conclusions about the true underlying trend in the labor market.

A significant portion of the weakness also stems from government employment. Federal payrolls declined sharply as deferred resignations tied to earlier buyout programs finally showed up in official counts. Since peaking earlier in the year, federal employment has fallen by more than a quarter-million jobs. While that has pushed the unemployment rate higher, it does not necessarily reflect broader weakness in private-sector hiring.

At the same time, labor force participation rose in November, suggesting that more people are actively looking for work. That dynamic can temporarily lift the unemployment rate even if the economy is not deteriorating rapidly. In other words, the increase in joblessness may be more about shifting labor supply than collapsing demand.

Federal Reserve Chair Jerome Powell has repeatedly emphasized the need for caution when interpreting recent data. He has noted that both labor and inflation metrics may be distorted, not just volatile, and warned against overreacting to any single report. Some Fed watchers believe monthly payroll growth may be overstated and that underlying job creation could be closer to flat or slightly negative—a scenario consistent with a late-cycle slowdown rather than an outright downturn.

For now, the November report reinforces the Fed’s patient stance. Labor market softness appears real, but there is little evidence that the broader economy has stalled. Inflation trends and upcoming employment data, particularly for December and January, will be critical in determining whether policymakers feel confident enough to resume cutting rates.

In short, November’s jobs data neither forces the Fed’s hand nor closes the door on future easing. It keeps policymakers in wait-and-see mode—alert to downside risks, but not yet convinced that the economy requires immediate additional support.

Russell 2000 Scores Record as Rate-Cut Hopes Boost Small-Cap Appetite

Posted on by slightbourne@noblecapitalmarkets.com

The Russell 2000 hit a fresh record as investors rotated into small-cap equities on renewed optimism that looser monetary policy could be on the horizon. The benchmark’s leadership reflects a market dynamic in which hopes for easier financial conditions are outweighing pockets of economic strength that have pushed yields higher across parts of the curve.

A string of private and partial data released ahead of the Federal Reserve’s final policy decision for the year painted a mixed picture of the U.S. economy. Weekly payroll indicators showed a marked improvement compared with recent losses, reversing a short stretch of weak readings and signaling that private-sector hiring has regained momentum in recent weeks. Meanwhile, labor demand metrics measuring job openings remained elevated, with vacancies concentrated in sectors such as retail, healthcare, transportation and manufacturing. That combination suggests employers are still searching for workers even as the pace of hiring fluctuates month to month.

Small business sentiment also ticked up, ending a multi-month slide and reflecting firmer revenue expectations and plans to add staff. At the same time, concerns persist about capital spending intentions and tight credit conditions, factors that temper enthusiasm for a broad-based recovery. Taken together, the data show a labor market that remains resilient in parts, but uneven across industries and firm sizes.

Market participants have zeroed in on how the Fed will interpret this mosaic of signals. Stronger-than-expected reads in select indicators have pushed short-term yields higher in a curve-flattening move that suggests traders are re-pricing the odds for near-term policy easing. The level of dissent within the Federal Open Market Committee will be closely watched; a higher number of officials opposing a December cut would signal persistent caution and could damp investor expectations for aggressive easing next year.

The Russell 2000’s rebound is notable because small caps tend to be more sensitive to financial conditions and credit availability. In an environment where rate-cut prospects rise, borrowing costs for smaller companies fall relative to a no-cut scenario, improving the outlook for earnings growth and refinancing. That dynamic has attracted reallocations away from megacap tech names and toward cyclical and domestically focused firms that stand to benefit from cheaper financing and a healthier consumer.

Yet the backdrop is not without risk. A recent pick-up in yield volatility and signs that some central banks are nearing the end of their easing cycles in other economies add uncertainty for global liquidity. Additional data surprises could quickly recalibrate expectations, and market pricing already reflects a degree of vulnerability to upside surprises in inflation or employment.

For investors, the current market action underscores the importance of monitoring both macro signals and monetary policy cues. Small caps have led the charge on the upside, but their outperformance is tied to the narrative of easier policy ahead. Should that narrative unravel, leadership could shift again.

As the Fed approaches its next meeting, markets will continue to weigh the tug of mixed economic data against the growing desire for lower interest rates. The Russell 2000’s new high is as much a reflection of positioning for future policy as it is a barometer of confidence in the domestic economic cycle.

Global Equity Fund Inflows Hit Five-Week High as Investors Lean Into AI and Market Pullback

Posted on by slightbourne@noblecapitalmarkets.com

Global equity funds experienced a sharp rise in inflows during the week ending November 5, signaling a renewed appetite for risk assets even as markets undergo a modest correction. According to LSEG Lipper data, investors poured $22.37 billion into global equity funds—the largest weekly allocation since early October—suggesting confidence in longer-term fundamentals despite short-term volatility.

The surge in investor enthusiasm comes as global markets digest a 1.6% decline in the MSCI World Index following last week’s record highs. Rather than retreating, many investors appear to view the dip as an opportunity to increase exposure to equities, particularly in transformative areas such as artificial intelligence. Optimism around accelerating AI-linked mergers, acquisitions, and corporate spending has continued to provide a tailwind for tech and growth-oriented sectors.

U.S. equity funds led the inflow spike, attracting $12.6 billion, also marking their strongest week since October 1. Meanwhile, investors allocated $5.95 billion to Asian equity funds and $2.41 billion to European funds, demonstrating broad global participation in the recent buying momentum.

The technology sector remained at the center of this trend, posting $4.29 billion in inflows—the largest weekly gain since at least 2022. As companies increasingly adopt AI tools, automation systems, and advanced cloud infrastructure, investors continue to position themselves ahead of long-term earnings growth tied to innovation.

Outside of equities, flows into fixed-income assets also maintained strength. Bond funds saw their 29th consecutive week of inflows, totaling $10.37 billion. Corporate bond funds drew $3.48 billion, while short-term bond funds added $2.36 billion, reflecting sustained demand for income-generating assets amid shifting rate expectations.

Money market funds saw a dramatic resurgence in popularity as well, gathering $146.95 billion, the highest level of inflows in ten months. These vehicles remain attractive for investors seeking liquidity and stability as central banks near the end of their global tightening cycles.

Meanwhile, gold and precious metals funds saw continued weakness, with withdrawals totaling $554 million for a second straight week. As risk appetite increases and real yields remain firm, interest in defensive commodities has waned, redirecting capital back into equities and fixed income.

Emerging markets also participated in the positive momentum. Emerging market equity funds recorded their second consecutive weekly inflow of $1.61 billion, though emerging market bond funds saw an outflow of $1.73 billion. This suggests a cautious but growing willingness to take equity exposure in developing regions while avoiding currency and rate-sensitive debt markets.

Taken together, the data reflects a market environment where investors are increasingly willing to deploy capital into areas tied to innovation, earnings growth, and global expansion—even as geopolitical uncertainty and short-term corrections continue. With AI driving renewed confidence and central banks shifting toward a more neutral stance, many investors appear to be positioning themselves for the next leg of the equity market cycle.

Fed Beige Book Points to Slower Spending and Hiring Ahead

Posted on by slightbourne@noblecapitalmarkets.com

The Federal Reserve’s latest Beige Book, released Wednesday, paints a picture of an economy losing momentum as 2025 draws to a close. With consumer spending weakening, hiring slowing, and businesses facing persistent cost pressures, the report arrives at a critical moment: just two weeks before the Fed’s next interest rate decision — and during a time when official data remains delayed due to a record-long government shutdown.

The Beige Book, which compiles anecdotal insights from businesses across all 12 Federal Reserve districts, showed that consumer spending declined further during the first half of November. Retailers reported softer foot traffic and more price-sensitive consumers, a sign that household budgets may be tightening again after a relatively steady summer.

At the same time, the US labor market — which has remained resilient for years — is now showing clearer signs of softening. According to the report, employers are scaling back hiring, implementing freezes, and trimming hours. Some firms indicated they were only replacing departing employees rather than adding new roles, while others attributed reduced hiring needs to efficiency gains from artificial intelligence, which is increasingly being used to automate entry-level or repetitive tasks.

Rising health insurance premiums are adding to the strain, increasing labor costs even as companies attempt to limit headcount.

Tariffs and Costs Keep Inflation Sticky, Even as Demand Softens

On the inflation front, the Beige Book noted that tariffs have pushed input costs higher for manufacturers and retailers, though companies vary in how much they pass along to consumers. Some are raising prices selectively based on customer sensitivity, while others feel strong competitive pressure to absorb the costs — squeezing profit margins.

However, the report also showed that prices for some materials have declined due to sluggish demand, delayed tariff implementation, or reduced tariff rates. This mixed environment reflects the broader disinflation trend the Fed has been monitoring closely.

Still, most businesses expect cost pressures to continue, even if they are hesitant to raise prices significantly in the near term.

Why the Beige Book Matters: Rising Odds of a December Rate Cut

With many government economic indicators delayed, the Beige Book is now one of the few timely sources of insight available to the Fed ahead of its December 10 policy meeting. And based on the slowdown in both spending and hiring, investors are increasingly convinced that the central bank will act.

Market expectations for a December rate cut climbed above 85%, rising sharply this week following comments from multiple Fed officials. New York Fed President John Williams said there is “room” for a near-term cut, while San Francisco Fed President Mary Daly and Fed Governor Chris Waller both signaled concern about the softening labor market.

However, not all policymakers agree. Boston Fed President Susan Collins and Kansas City Fed President Jeff Schmid have urged caution, pointing to mixed inflation signals and warning against moving too quickly.

With consumer spending cooling, hiring softening, and inflation pressures lingering, the Fed’s Beige Book suggests an economy that is decelerating — but not collapsing. Whether that slowdown is enough to justify a December rate cut will be decided in less than two weeks, making this one of the most pivotal policy moments of the year.

The Most Unhelpful Jobs Report of the Year Complicates the Fed’s Next Move

Posted on by slightbourne@noblecapitalmarkets.com

The Federal Reserve’s December policy decision has become significantly more complicated following the release of the long-delayed September jobs report. After weeks of uncertainty caused by the government shutdown, economists were hoping the data would offer at least some directional clarity. Instead, the report delivered a contradictory mix of signals that has left markets, analysts, and policymakers struggling to determine whether the Fed’s next move will be a rate cut — or simply holding steady.

On the surface, the headline numbers appeared encouraging. Employers added 119,000 jobs in September, more than double what forecasters had anticipated. In a typical environment, that level of job creation would be considered firm evidence that the labor market still retains momentum.

However, the rest of the report painted a more complicated — and in some ways troubling — picture. The unemployment rate nudged higher to 4.4%, and on an unrounded basis reached 4.44%, inching close to the 4.5% threshold that some Fed officials view as a sign that labor conditions may be softening. Layered on top of that is the fact that this data is nearly two months old. Because of the shutdown, the Labor Department will not release an October report at all, and the November report will not be available until after the Fed meets in mid-December. As a result, policymakers are attempting to make a major policy decision with limited, stale visibility.

Another challenge is the unusually choppy pattern of job creation over the last several months. Hiring dipped into negative territory in June, rebounded in July, contracted again in August after revisions, and then jumped higher in September. This volatility makes it difficult to determine whether the labor market is gradually slowing or simply experiencing temporary fluctuations after several years of rapid post-pandemic recovery.

A significant structural factor shaping recent trends is the slowdown in immigration. With fewer new workers entering the labor force, the “break-even” number of jobs needed to maintain a stable unemployment rate has decreased to an estimated 30,000 to 50,000 per month. Since September’s job gains far exceeded that range, it indicates that demand for labor remains healthier than the rising unemployment rate alone suggests.

Sector-level data also highlights a mixed landscape. Industries such as healthcare and hospitality continue to show notable strength, reflecting persistent consumer demand and structural labor shortages. Meanwhile, other sectors have begun to lose momentum, reinforcing the idea that the labor market is no longer uniformly strong but instead is becoming more uneven.

Overall, the economy has added an average of 76,000 jobs per month so far in 2025 — a pace that aligns with the lower growth environment of a cooling, but still functioning, labor market.

Inside the Fed, opinions remain divided. Some policymakers believe easing rates further is consistent with guiding monetary policy back toward a neutral setting. Others see the recent uptick in unemployment, combined with limited fresh data, as reasons to pause. Financial markets reflect this uncertainty as well, with traders now assigning roughly even odds to a December rate cut.

For now, the September report provides more ambiguity than clarity. Without current data and with mixed signals across key indicators, the Fed enters its next policy meeting navigating perhaps its murkiest environment of the year.

Trump Signs Funding Bill, Ending Record 43-Day U.S. Government Shutdown

Posted on by slightbourne@noblecapitalmarkets.com

President Donald Trump has officially signed a bipartisan funding bill that ends the longest government shutdown in United States history. The measure, passed late Wednesday night, restores full federal operations after 43 days of disruption that affected millions of Americans and brought key government services to a halt.

The funding package, approved by both the House and the Senate earlier in the week, will keep the government running through the end of January 2026. It represents the culmination of weeks of political stalemate, public frustration, and mounting economic pressure that forced lawmakers to compromise after nearly a month and a half of gridlock.

The shutdown began on October 1 following a breakdown in negotiations over the continuation of expanded Affordable Care Act (ACA) subsidies. Senate Democrats had refused to pass a short-term spending bill that did not include an extension of the health care tax credits, while Republicans resisted expanding what they viewed as unsustainable federal spending. The resulting impasse left more than one million federal workers without pay and led to widespread delays in public services, from airport operations to food assistance programs.

The newly signed legislation not only reopens government agencies but also ensures that all federal employees will receive full back pay for the period they were furloughed. The measure reverses shutdown-related layoffs and provides emergency funding to several programs, including the Supplemental Nutrition Assistance Program (SNAP), which supports 42 million Americans. Additionally, the Department of Transportation announced that the restrictions on flight operations imposed during the shutdown due to air traffic controller shortages would be lifted, bringing relief to travelers and airlines alike.

Politically, the bill underscores the deep divisions within Congress but also demonstrates the necessity of bipartisan cooperation. The House passed the measure with a narrow 222–209 vote, highlighting the sharp partisan split that defined the shutdown from the beginning. In the Senate, the funding measure narrowly reached the 60-vote threshold required to overcome a filibuster after a small group of Democrats and one independent senator joined Republicans in support.

The temporary funding measure also includes a provision allowing Senate Democrats a future vote on extending ACA subsidies in December, setting the stage for another round of intense debate later this year. The agreement offers only short-term stability, and lawmakers now face the challenge of negotiating a longer-term budget plan before funding expires in early 2026.

The shutdown’s economic and social consequences were far-reaching. Delays in federal benefits strained households living paycheck to paycheck, while disruptions in government contracting and transportation operations weighed on business productivity. The incident also reignited discussions about reforming the federal budget process to prevent recurring shutdowns caused by partisan gridlock.

Federal workers are expected to return to their jobs immediately, with agencies beginning the process of restoring full operations and processing delayed payments. While the passage of the bill provides immediate relief to millions, it also serves as a reminder of the fragility of the nation’s political landscape and the consequences when compromise is delayed.

As Washington returns to normal operations, the focus now shifts toward preventing another crisis when the temporary funding expires early next year.

Graham (GHM) – A Solid 2Q26

Posted on by slightbourne@noblecapitalmarkets.com


Tuesday, November 11, 2025

Graham Corporation designs, manufactures and sells critical equipment for the energy, defense and chemical/petrochemical industries. The Company designs and manufactures custom-engineered ejectors, vacuum pumping systems, surface condensers and vacuum systems. It is a nuclear code accredited fabrication and specialty machining company. It supplies components used inside reactor vessels and outside containment vessels of nuclear power facilities. Its equipment is found in applications, such as metal refining, pulp and paper processing, water heating, refrigeration, desalination, food processing, pharmaceutical, heating, ventilating and air conditioning. For the defense industry, its equipment is used in nuclear propulsion power systems for the United States Navy. The Company’s products are used in a range of industrial process applications in energy markets, including petroleum refining, defense, chemical and petrochemical processing, power generation/alternative energy and other.

Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Overview. Graham put up solid results for the second quarter of fiscal 2026. The Company executed well across all the business lines, driving broad based-growth. Demand across the end markets remains healthy, and the Defense and Space markets continue to see robust activity.

2Q26 Results.  Revenue grew 23% to $66 million, driven by solid performance across all end markets. We were at $59 million. Adjusted EBITDA was $6.3 million, up 12% from the prior year, and adjusted EBITDA margin was 9.5%. We had forecasted $6.2 million and 10.4%. Net income for the quarter was $0.28 per diluted share, and adjusted net income was $0.31 per diluted share. We were at $0.30 and $0.32, respectively.


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