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Bond traders eye US jobs data for clues.

Traders seeking support for bets that the Fed will cut interest rates this month will be watching the US jobs report at 8:30 a.m. in Washington. It’ll likely take a very strong reading to upend the view the Fed will cut by a quarter point.

The European Central Bank will cut interest rates more rapidly than previously thought to boost the economy — a quarter-point reduction next week and then at every policy meeting through June, a Bloomberg survey shows.

Chinese shares rally on optimism a key policy meeting next week will deliver fresh stimulus. Later today, the markets’ focus will be on US payrolls data forecast to show a rebound in hiring in November.

Trading turned subdued ahead of the November US non-farm payrolls report due on Friday, which is expected to show hiring bounced. The S&P 500 fell for the first time in five days after repeatedly closing at a record, while Treasury yields pared an ascent seen earlier in the US session.

Brent crude fell for a second day to trade around $72 per barrel after OPEC+ agreed for a third time to delay the revival of halted production, with oil demand faltering in China.

Fed's 'Beige Book' shows businesses confident in demand prospects

Economic activity increased slightly in November after little change in preceding months, and US businesses grew more upbeat about demand prospects, the Federal Reserve said in its latest Beige Book survey. The Fed report had recently painted a bleaker picture of the economy than official government statistics, showing flat growth, lower hiring rates and only small increases in prices. In many cases that contradicts topline economic figures showing still-strong activity, powered by ample consumer spending and a relatively low unemployment rate. (Bloomberg Economics - Central Banks | Dec 4)

Wall Street short-sellers throwing in the towel

Short-sellers are capitulating as the S&P 500 Index keeps hitting record highs and is set for its best year since 2021, according to Citigroup Inc. strategists. Investor positioning in S&P 500 futures is “completely one-sided,” the strategists led by Chris Montagu wrote in a note. It’s “setting new highs for a fourth consecutive week, and increasingly, the hold-out shorts are capitulating,” they said. (Bloomberg Markets | Dec 3)

Fed's Kugler credits 'positive supply shocks' for solid economic performance

Federal Reserve governor Adriana Kugler credited the US economy’s ability to maintain solid growth with cooler inflation and slower hiring this year to a boost in both immigration and worker productivity. In remarks prepared for delivery Tuesday, Kugler implied that any changes that reverse those two “positive supply shocks” or that create offsetting “negative supply shocks” could make it harder for the Fed to bring down inflation. (The Wall Street Journal | Dec 3)

Wall Street’s AI-powered rally risks ‘correction’, Vanguard warns

Investors’ rush into artificial intelligence stocks this year has overplayed the near-term potential of the technology, raising the risks of a “correction” in share prices, asset management powerhouse Vanguard has warned. Joe Davis, Vanguard’s chief economist, said investors had gone too far in their bets on AI’s potential, even if the technology proves to have similar effects to the personal computer, whose adoption since the 1980s revolutionized productivity and jobs. (Financial Times - free link | Dec 3)

New bond rules mean insurers have a lot of work to do

According to an AllianceBernstein note published Tuesday, insurers and companies that manage their assets will need to overhaul how they determine which of their investments count as bonds. New industry rules will go into effect on Jan. 1, and the regulator's principles-based definition will become effective on Jan. 1. The new approach elevates substance over form in bond labeling. (AllianceBernstein | Dec 3)

Photo: Ng Han Guan | Associated Press

Chinese telecom-hacking offensive is persistent and international, US says

Chinese government hackers have compromised telecom infrastructure across the globe as part of an espionage campaign that has affected dozens of countries, US officials said Wednesday. At least eight telecom firms in the US have been breached in the so-called Salt Typhoon campaign, traced to a Chinese intelligence agency.

— The Wall Street Journal

DHS uses private spy tools with few privacy safeguards, GAO says

The Department of Homeland Security’s law enforcement agencies are deploying surveillance technologies without adequate protections against bias or privacy, according to a new government watchdog report. DHS’s agencies leveraged over 20 types of surveillance technologies in 2023 — but their use of the tools didn’t always address key privacy protections, according to a report released Tuesday by the US Government Accountability Office. The tools ranged from pole cameras to drones and a nationwide network of license plate readers used by agencies including Customs and Border Protection, Immigration and Customs Enforcement, and the Secret Service, according to the report.

— Bloomberg Law

US officials urge Americans to use encrypted apps amid unprecedented cyberattack

As AT&T and Verizon work to eject the alleged hackers from their systems, the FBI and the Cybersecurity and Infrastructure Security Agency said Tuesday that customers should use encrypted apps for texting and voice calls.

— NBC News

Illustration: Pedro Nekoi | WSJ

The necktie is making an office comeback

The boss wears a hoodie. The intern wears a necktie. Some 20-somethings are embracing the necktie to project gravitas and show personality with a pattern or pop of color. Women are also getting in on the tie renaissance, saying it helps command a room.

— The Wall Street Journal

Why the flying experience feels so much worse

The front of the plane is now a haven of luxury, while coach has turned into a low-cost shakedown. The real winner: Airlines. A substantial number of people say they’d be willing to buy into a more pleasant setup. But even the airlines have been surprised by exactly how eager Americans are to pay for more comfort.

— Bloomberg Businessweek

Anyone can buy data tracking US soldiers and spies to nuclear vaults and brothels in Germany

More than 3 billion phone coordinates collected by a US data broker expose the detailed movements of US military and intelligence workers in Germany — and the Pentagon is powerless to stop it.

— Wired