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Morning Bid: Just a blip for risk assets, more Fed pain for the dollar

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Morning Bid: Just a blip for risk assets, more Fed pain for the dollar

LONDON, Dec 3 (Reuters) – By Yoruk Bahceli, markets correspondent

What matters in U.S. and global markets today

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Risk assets are showing further signs of recovery on Wednesday from a broad selloff that kicked off the month, but bonds are sitting on their losses for now.

And the dollar is down with focus back to the Federal Reserve, with Trump delaying his pick for the next chair to 2026. Meanwhile, investors are stuck watching the ADP jobs report in the absence of November payrolls.

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I’ll get into all the market news below.

But first check out Mike Dolan’s latest column on why investors should worry less about so-called ‘vigilantes’ and pay more attention to bond-market ‘termites’.
And listen to the latest episode of the new Morning Bid, opens new tab daily podcast. Subscribe to hear Mike and other Reuters journalists discuss the biggest news in markets and finance seven days a week.

Today’s Market Minute

  • Russia and the U.S. did not reach a compromise on a possible peace deal to end the war in Ukraine after a five-hour Kremlin meeting between President Vladimir Putin and Donald Trump’s top envoys, the Kremlin said on Wednesday.
  • An acute global shortage of memory chips is forcing artificial intelligence and consumer-electronics companies to fight for dwindling supplies, as prices soar for the unglamorous but essential components that allow devices to store data.
  • China is likely to stick to its current annual economic growth target of around 5% next year, government advisers and analysts said, a goal that would require authorities to keep fiscal and monetary spigots open as they seek to snap a deflationary spell.
  • It’s been almost 10 months since the Democratic Republic of Congo, the world’s dominant cobalt supplier, halted exports of the battery metal, which has been a booster for the bombed-out cobalt price, writes ROI Mentals Columnist Andy Home.
  • Benchmark U.S. natural gas prices are ending 2025 just as they entered it – with a strong rally. And that’s bad news for people hoping for further cuts to U.S. coal use, writes ROI Global Energy Transition Columnist Gavin Maguire.

Was it all just a blip for risk assets?

The broad selloff that kicked the week off for markets is proving to be a blip for risk assets.

After dropping half a percent on Monday, the S&P 500 rose 0.25% on Tuesday and futures were up in early London trading.

Bitcoin was up another 1.7% after rising nearly 6% on Tuesday. But it remains 26% below an October peak.

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In other signs that it’s not all plain sailing, 10-year Treasury yields dipped on Wednesday but were still up 7 basis points this week, while Japan’s bond yields hit multi-year highs.

But in the absence of a narrative to drive markets, all focus remains on the Fed, its meeting next week where traders are banking on a rate cut, and who will lead it next.

U.S. President Donald Trump said on Tuesday he would announce his pick for the next Fed chair — largely expected to be White House economic advisor Kevin Hassett — early next year, later than previously expected, having previously said he already knows who he’ll pick.

Later on Tuesday, Trump said a potential Fed chair was present as he introduced Hassett at a meeting.

Bets on Hassett as the next Fed chair briefly dipped on betting site Polymarket on Tuesday, but quickly recovered.

Investors reckon Hassett, seen as favoring lower interest rates, could dent the dollar further. The euro and sterling reached their highest in over a month against the dollar on Wednesday as Fed rate cut bets continue to weigh on the dollar.

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Focus turns to economic data, though the prints are unlikely to sway the Fed.

November’s ADP report is expected to show private employers added 10,000 jobs, down from 42,000 in October, another sign of the labor market weakening.

While the ADP doesn’t correlate with the government’s jobs report, markets are watching alternatives more closely as November’s official one will only be released after the Fed meeting, thanks to the U.S. government shutdown.

The ISM services PMI is also due, following data on Monday showing a ninth month of contraction for the manufacturing sector.

Elsewhere, it’s all about geopolitics.

Russia and the U.S. did not reach a compromise on a possible Ukraine peace deal.
The European Union’s executive arm is set to move ahead with a proposal to use frozen Russian assets to fund lending to Ukraine. It’s also leaving open the possibility of raising funding through joint EU borrowing — an option financial markets would also welcome — or a combination of the two.

But Belgium, home to Euroclear where the assets sit and concerned over legal repercussions, was quick to say the new proposals still don’t address its concerns.

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The bloc also agreed to phase out Russian gas imports, which still account for 12% of its total imports, by late 2027.

Chart of the day

Chart shows Kevin Hassett is in the lead to chair the Fed on betting site Polymarket

White House Economic Advisor Kevin Hassett is still overwhelmingly seen as the candidate Trump will nominate to succeed Jay Powell as Federal Reserve Chair, according to betting site Polymarket.

Today’s events to watch

* ADP national employment report (November)

* U.S. industrial production (September)

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* ISM services PMI (November)

* S&P Global services, composite final PMIs (November)

* U.S. corporate earnings: Dollar Tree, Five Below, Macy’s, Thor Industries, PVH Corp, Torrid Holdings, Tillys

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
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By Yoruk Bahceli; Editing by Bernadette Baum

Our Standards: The Thomson Reuters Trust Principles., opens new tab

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Head of Ukraine’s security service Maliuk to be replaced, Zelenskiy says

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Head of Ukraine’s security service Maliuk to be replaced, Zelenskiy says

KYIV, Jan 5 (Reuters) – Ukrainian President Volodymyr Zelenskiy said on Monday that he planned to replace the head of the country’s SBU security service, Vasyl Maliuk, as part of a wider reshuffle that has also seen a new presidential chief of staff.

Maliuk was appointed SBU chief in February 2023, having already served as acting head for months before.

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During his tenure, the service has carried out a number of high-profile operations, including an audacious drone attack on dozens of Russian strategic bombers stationed thousands of kilometers from Ukraine.

The SBU said he also oversaw a strike on a Russian submarine and three attacks on the bridge connecting Russia to the occupied Crimean peninsula, a crucial logistical node for Moscow.

Maliuk has been praised by analysts for improving the SBU’s effectiveness, after his predecessor Ivan Bakanov was dismissed by Zelenskiy in July 2022 for failing to root out Russian spies.

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Zelenskiy said on X that he had asked Maliuk instead to focus more on combat operations, adding: “There must be more Ukrainian asymmetric operations against the occupier and the Russian state, and more solid results in eliminating the enemy.”

The move comes days after Zelenskiy announced military intelligence chief Kyrylo Budanov would become his new chief of staff, and that he would seek to appoint new defence and energy ministers.

Reporting by Yuliia Dysa and Max Hunder
Editing by Gareth Jones and Toby Chopra

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Mexican president rejects US sending troops to her country: ‘I don’t believe in an invasion’

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Mexican president rejects US sending troops to her country: ‘I don’t believe in an invasion’

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Mexican President Claudia Sheinbaum on Monday condemned what she described as U.S. intervention in Venezuela and rejected the idea of American troops entering Mexico, reaffirming her government’s commitment to national sovereignty.

“We categorically reject intervention in the internal affairs of other countries,” Sheinbaum said at a press conference in Mexico City, according to an official transcript of the speech released by her office.

“The history of Latin America is clear and forceful, the intervention has never brought democracy, it has never generated well-being or lasting stability. Only people can build their own future, decide their path, exercise sovereignty over their natural resources and freely define their form of government,” she said.

The U.S. military on Saturday carried out an operation in Caracas, extracting former Venezuelan leader Nicolás Maduro and his wife, Cilia Flores, from their compound.

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MADURO CAPTURE ECHOES NORIEGA TAKEDOWN THAT USED ROCK MUSIC AS PSYCHOLOGICAL WARFARE AGAINST DICTATOR

Mexican President Claudia Sheinbaum answers questions during her morning press conference at Palacio Nacional in Mexico City on Jan. 5, 2026. (Raquel Cunha/Reuters)

Maduro and Flores were boarded onto USS Iwo Jima and flown to New York to face federal charges, with their arraignment taking place on Monday in Manhattan.

Maduro is charged with four counts: narco-terrorism conspiracy, cocaine importation conspiracy, possession of machine-guns and destructive devices, and conspiracy to possess machine-guns and destructive devices.

VENEZUELAN PRESIDENT NICOLAS MADURO’S NARCO CASE ECHOES US HISTORY OF TARGETING ALLEGED FOREIGN DRUG KINGPINS

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His wife is charged with three counts: cocaine importation conspiracy, possession of machine-guns and destructive devices, and conspiracy to possess machine-guns and destructive devices.

Venezuelan President Nicolás Maduro and his wife Cilia Flores are seen in handcuffs after landing at a Manhattan helipad, escorted by heavily armed Federal agents as they make their way into an armored car en route to a Federal courthouse in Manhattan on Jan. 5, 2026. (TheImageDirect.com)

Sheinbaum said that following the capture of Venezuela’s leader and his wife, and amid warnings from President Donald Trump that Mexico must “get their act together,” Mexican sovereignty and self-determination remain non-negotiable.

Trump told reporters aboard Air Force One that he thinks Sheinbaum is a “terrific person,” but the cartels are “running Mexico.”

“We’re going to have to do something. We’d love Mexico to do it, they’re capable of doing it, but unfortunately the cartels are very strong in Mexico,” Trump said.

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GREENE HITS TRUMP OVER VENEZUELA STRIKES, ARGUES ACTION ‘DOESN’T SERVE THE AMERICAN PEOPLE’

Sheinbaum said her country is cooperating with the United States to help fight against drug trafficking, organized crime and the flow of fentanyl.

President Donald Trump speaks at his Mar-a-Lago club, Saturday, Jan. 3, 2026, in Palm Beach, Fla, as Secretary of State Marco Rubio and War Secretary Pete Hegseth listen. (AP Photo/Alex Brandon)

“I don’t believe in an invasion. I don’t even think it’s something they’re taking very seriously,” Sheinbaum told reporters in Spanish when asked about a potential U.S. intervention, according to Reuters’ translation of her remarks.

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She said Trump has repeatedly insisted during their phone conversations that the U.S. Army be allowed to enter Mexico.

“We have said no very firmly — first because we defend our sovereignty, and second because it is not necessary,” Sheinbaum told reporters.

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Free civic space in France, Italy and Germany under threat, study says

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Free civic space in France, Italy and Germany under threat, study says

France, Germany and Italy are the three European Union countries experiencing a worsening environment for civil society, according to a report by CIVICUS, the global alliance of civil society organisations and activists.

All three member states were downgraded from “narrowed” to “obstructed” — the third-lowest of five possible categories.

The annual report tracks the state of freedom of association, peaceful assembly and expression in 198 countries and territories, rating them as open, narrowed, obstructed, repressed or closed.

Across Europe, the most frequently reported violations include the detention of protesters, disruption of demonstrations, attacks on journalists, use of excessive force and public vilification.

“Far fewer people in Europe can exercise fundamental freedoms without significant barriers, largely due to intensifying crackdowns on protests and human rights defenders in some of Europe’s largest democracies,” Tara Petrović, Europe and Central Asia researcher for the CIVICUS Monitor, said.

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“European leaders, particularly within the EU, must push back on these trends so that the continent remains at the forefront of protecting rights and civic space.”

France’s downgrade reflects an accumulation of growing restrictions on peaceful protests and freedom of expression, alongside the misuse of laws to dissolve NGOs and intimidate activists in recent years.

Meanwhile, Germany’s civic space deterioration has occurred “at an alarming rate”, according to the report.

The drop is due to repression of those demonstrating for climate justice, migrant rights and against austerity measures.

“German authorities have paired political pressure with heavy-handed policing to suppress free expression, from storming a relocated event with UN Special Rapporteur Francesca Albanese to monitoring students who livestreamed it,” the report noted.

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The situation for civil society in Italy has worsened following new laws passed in 2025 that introduced dozens of new criminal offences, including harsher penalties for peaceful protests.

In Europe, Georgia and Serbia moved to the “repressed” category, the second-worst civic space rating, while Switzerland changed to “narrowed”.

This shift is largely due to intensifying crackdowns on human rights defenders and protests in some of Europe’s largest democracies.

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