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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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Pentagon hosts first-ever Israeli–Lebanese military talks aimed at curbing Hezbollah

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Pentagon hosts first-ever Israeli–Lebanese military talks aimed at curbing Hezbollah

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Israeli and Lebanese military delegations opened Pentagon-mediated talks Friday morning in Washington, launching a new U.S.-brokered security coordination track aimed at preventing renewed escalation along the Israel–Lebanon border and shoring up a fragile ceasefire reached in mid-April.

A State Department official told Fox News Digital that, “As we have continuously stated, the only path to lasting peace is through direct negotiations between the two sovereign governments.”

The discussions mark a shift from diplomatic negotiations into direct military coordination, with talks expected to focus on ceasefire enforcement, border stability, Israeli withdrawal from parts of southern Lebanon and the role of the Lebanese Armed Forces in containing Hezbollah.

ISRAEL MOVES TOWARDS CEASEFIRE DEAL WITH HEZBOLLAH: REPORTS

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Michael Needham, counselor for the U.S. Department of State, U.S. Ambassador to the United Nations Mike Waltz, Secretary of State Marco Rubio, U.S. Ambassador to Lebanon Michel Issa, Lebanese Ambassador to the U.S. Nada Hamadeh Moawad, and Israeli Ambassador to the U.S. Yechiel Leiter pose for a photo before a meeting at the State Department in Washington, D.C., on April 14, 2026. (Jacquelyn Martin/AP Photo)

The talks come weeks after a U.S.-brokered ceasefire first reached during the broader regional conflict tied to the U.S.–Iran war. While large-scale fighting has eased, Israeli forces continue operating inside parts of southern Lebanon and Hezbollah maintains drone and rocket capabilities, keeping tensions high along the border.

The ceasefire was extended on May 15 for another 45 days, creating pressure on both sides to show progress before the current arrangement expires.

But analysts say the central question overshadowing the talks is whether Lebanon can realistically curb Hezbollah’s military power without risking internal collapse.

“This will be the first meeting between representatives of the militaries since the start of the negotiation process between Lebanon and Israel,” Ahmed Sharawi, a research analyst at the Foundation for Defense of Democracies think tank, told Fox News Digital.

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Representing Lebanon in the talks is Lebanese Armed Forces (LAF) commander Gen. Rodolphe Haykal, who previously served as commander of the Lebanese Armed Forces in southern Lebanon, an area where Hezbollah maintains a strong presence. Hezbollah is the Iran-backed Lebanese terrorist organization designated by the United States as a foreign terrorist organization. 

“What we should expect is talks regarding de-confliction and what the expectations are for the LAF in terms of the broader disarmament plan against Hezbollah’s weapons,” he said.

Sharawi said the chances of a broader breakthrough remain limited so long as Hezbollah remains heavily armed and politically entrenched inside Lebanon.

“The biggest obstacle here is that the Lebanese state is yet to present a feasible plan to disarm Hezbollah,” he said.

LAWMAKERS QUESTION WHETHER US MOVING FAST ENOUGH TO CAPITALIZE ON HEZBOLLAH’S WEAKENED STATE

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But analysts say the central question overshadowing the talks is whether Lebanon can realistically curb Hezbollah’s military power without risking internal collapse.  (Ibrahim AMRO / AFP via Getty Images)

He pointed to the terms of the November 2024 ceasefire agreement, which placed responsibility for disarming Hezbollah on the Lebanese state.

“We are yet to see the confiscation of one single bullet from Hezbollah,” Sharawi said.

He also warned that Hezbollah’s deep support among Lebanon’s Shiite population complicates any attempt to move toward normalization with Israel.

“There’s a fear of a civil war,” he said. “That also accounts for the Lebanese state’s unwillingness to disarm Hezbollah.”

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The talks opened as Prime Minister Benjamin Netanyahu signaled Israel intends to maintain military pressure on Hezbollah despite the negotiations.

Sharawi argued the Trump administration nevertheless appears determined to push the process forward as part of a broader effort to weaken Iranian influence in the region.

“The reason behind these meetings is that President Trump is really trying to push for a peace agreement between Israel and Lebanon,” he said. “Peace between these two countries could really undermine Hezbollah and its influence in Lebanon.”

WALTZ SAYS TRUMP HAS CREATED ‘BEST CHANCE IN OUR LIFETIME’ TO BREAK HEZBOLLAH’S GRIP ON LEBANON

Churches in the southern Lebanese town of Rmeish remained standing throughout the conflict, as residents say the community resisted Hezbollah attempts to launch rockets from the area. (Jusoor News)

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Israeli analysts similarly described the talks less as a breakthrough and more as a strategic signal aimed at Hezbollah.

“The war between us and Hezbollah is continuing,” Yossi Kuperwasser, senior project manager at the Jerusalem Institute for Strategy and Security and former head of the Research Division of Israeli Military Intelligence, told Fox News Digital.

“There is no doubt the Lebanese government does not have a monopoly on the use of force in Lebanon,” he said.

‘OVERBLOWN’ REPORTS ON ISRAEL–LEBANON NORMALIZATION RISK HINDERING BORDER TALKS BEFORE THEY BEGIN: OFFICIAL

IDF troops discovered a Hezbollah weapons cache near a UNIFIL post in southern Lebanon in 2024. (IDF Spokesman’s Unit)

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Kuperwasser said expectations for an immediate diplomatic breakthrough should remain low, but argued the talks themselves send an important political message.

“The purpose of these talks is first and foremost to send a message to Hezbollah and also to the Americans,” he said. “Both sides are prepared to sit together against Hezbollah and signal that they are moving, even if slowly, toward normalization between Israel and Lebanon.”

He argued Hezbollah has been weakened politically and militarily by the ongoing conflict and by growing frustration among Lebanese civilians displaced by the fighting.

“For years Hezbollah portrayed itself as the defender of Lebanon,” Kuperwasser said. “Now many Lebanese see Hezbollah as responsible for the suffering Lebanon is experiencing.”

Kuperwasser added that while Israel supports strengthening the Lebanese army, Beirut fears direct confrontation with Hezbollah could ignite another civil war.

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“The Lebanese government fears military action against Hezbollah would lead to civil war,” he said. “That fear shapes everything.”

The talks also come amid mounting domestic pressure inside Israel, where critics of Netanyahu have accused the government of pursuing containment rather than decisive military victory against Hezbollah.

Speaking Friday during a visit to Israel’s northern front, Netanyahu said Israeli forces had crossed the Litani River and were operating across multiple parts of Lebanon. 

“We are operating in Beirut, in the Bekaa Valley, across the entire front and striking Hezbollah hard,” Netanyahu said.

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A woman holds her dog as she walks past burned cars a day after an Israeli airstrike in Beirut, Lebanon, on April 9, 2026. (Emilio Morenatti/AP)

Meanwhile, Lebanon’s leadership is attempting to balance growing American pressure with fears of internal instability and renewed sectarian conflict.

Neither the Israeli Embassy in Washington nor the Lebanese Embassy in Washington immediately responded to requests for comment. The Pentagon did not have anything to add when asked to comment. 

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Israel, Russia among new additions on UN sexual violence ‘blacklist’

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Israel, Russia among new additions on UN sexual violence ‘blacklist’

The United Nations has confirmed it placed Israel on a blacklist of countries suspected of committing sexual violence against civilians, and pushed back on accusations made by Israel regarding its inclusion.

The list, part of a “conflict-related sexual violence” report released on Friday, prompted Israel’s foreign ministry to say it would sever all ties with UN Secretary-General Antonio Guterres.

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Last August, the UN cited “credible information” regarding sexual violence committed by Israeli security forces against Palestinian detainees in prisons and other detention centres, and said UN inspectors had been denied access to the facilities.

“We invited the representative of the UN to come to Israel to check those ridiculous allegations. They chose not to come,” Israel’s UN Ambassador Danny Danon posted on X on Thursday.

“I never received an iota of information on measures taken by the government of Israel on implementation of the preventive measures,” Pramila Patten, the UN official who authored the report, told reporters on Friday at a briefing at the UN’s New York headquarters.

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“I have made several requests in writing, and sometimes during meetings, for details about initial steps, including the issuance of orders of command information on access and information on accountability measures, but I did not get any response on the substantive aspect of the preventive measures,” she added.

Patten did confirm that there had been an invitation from Israel, but referred also to disagreements about the scope of the visit and related issues of access and cooperation, and said it ultimately had to be suspended due to Israel’s war on Gaza.

‘Multiple incidents’ in Gaza and occupied West Bank

This year’s report ⁠said that in 2025 “the United Nations verified multiple incidents of conflict-related sexual violence, including as a form of torture, inflicted against 14 men, seven women, nine boys and one girl from the Gaza Strip and the [occupied] West Bank.”

It said 13 of the attacks happened last year, and 18 in 2023 and 2024.

“Violations consisted ⁠of rape, including with objects, gang rape, attempted rape, physical violence to the genitals, instances of targeted shooting of the genitals, touching ⁠of breasts and genitals, strip and cavity searches conducted without apparent security justification, forced nudity and threats of rape,” it said.

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“Rape and gang rape, in some cases repeated, were perpetrated against nine victims, the majority Palestinians from Gaza,” it said, adding that perpetrators included Israeli armed and security forces. The assaults occurred primarily during detention and interrogation in several sites, including military camps, at checkpoints and during Israeli military operations in the Occupied Palestinian Territory.

It said survivors included journalists and human rights defenders and in some cases, the violations were filmed or photographed, including one case of rape.

The report added that sexual violence against female detainees included mostly threats of rape, forced nudity, unwanted touching, and humiliating or degrading strip searches without justification, while men and boys were targeted with rape, attempted rape and violence to the genitals.

This resulted in five male victims suffering severe rectal bleeding or swelling for multiple days or ‌weeks, ‌it added.

Russia added to list alongside Israel

The latest UN report also contains harrowing descriptions of abuses at the hands of Russia’s military after “findings of continued patterns of sexual violence documented”.

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The UN human rights monitoring mission in Ukraine had verified 310 cases of conflict-related sexual violence perpetrated by Russian armed and security forces.

It said the cases, including rape, gang rape, genital mutilation, electric shocks and beatings to the genitals, injured 280 men, 26 women and four girls.

The report’s annex lists 77 parties deemed responsible for patterns of conflict-related sexual violence, including 62 non-state actors.

New additions include three non-state armed groups operating in the Democratic Republic of the Congo.

Nearly 10,000 cases of conflict-related sexual violence were recorded worldwide last year – more than double the previous year’s figure, the report said.

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Being added to the list does not automatically carry specific punitive measures such as sanctions, although public naming and shaming can cause significant reputational damage for the ‌states involved, and those repeatedly listed are barred from UN peacekeeping operations.

Patten said the increase in cases of conflict-related sexual violence verified by the United Nations marks a very disturbing trend that was still only the “very tip of the iceberg”.

“This number can ⁠be attributed to the fact that we are going through a time when we have a record number of extremely violent conflicts, and the fact that perpetrators are feeling emboldened by a context of impunity, where this crime is almost cost-free,” she said.

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How Japan Lost 3 Million People in Five Years

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How Japan Lost 3 Million People in Five Years

Japan’s population fell by more than 3 million over the past five years, according to official statistics released on Friday, a drop that underscores the depths of the country’s accelerating demographic crisis.

The population stood at 123 million in 2025, according to preliminary census results, down from 126.1 million in 2020. It is the biggest decrease since the government began collecting census data in 1920.

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Japan’s population loss is accelerating

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Change in population every five years

Source: Statistics Bureau of Japan

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Japan’s population peaked in 2008 at 128 million, and it is projected to fall to 87 million by 2070. The country is now roughly the same size it was in 1989.

For decades, the Japanese authorities have tried to make up for the rapidly aging population by encouraging young people to have more children. But the effort has fallen short, leaving the country with one of the world’s lowest birth rates. For each new birth, there are two deaths.

Japan is a harbinger of the demographic headwinds that will soon buffet other developed countries. The shrinking population is already constraining Japan’s economic growth, putting pressures on its health care system and causing labor shortages.

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The census data shows that the demographic crisis has now reached almost every part of Japan. All but two of the country’s 47 prefectures reported population decreases in 2025, and the rate of decline is accelerating.

Among the hardest hit areas were the northern prefectures of Akita and Aomori, where the population shrank by about 8 percent from 2020 to 2025. Those areas are home to some of Japan’s oldest residents, and young people have left at a rapid rate because of stagnant wages and harsh winters.

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Most of Japan is losing population

The Japanese countryside is hollowing out as the population ages and young people leave to seek jobs in Tokyo, Osaka, Nagoya and other cities. In some rural areas, schools are being converted into nursing homes and community centers. Millions of homes are vacant; government offices and hospitals are downsizing; and train lines are shutting down.

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Opening Japan’s doors more widely to foreigners could help offset the declines. But the government has long taken a cautious approach to immigration, and nationalist politicians and commentators have gained influence recently with a “Japan First” agenda.

“Japan has now reached a level where this kind of decline is not reversible in the short- or medium-run,” said James Raymo, a professor of sociology at Princeton University who studies Japan. “It simply will not happen in the absence of mass immigration.”

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There were a few bright spots in the census, including Okinawa, a subtropical chain of islands in the south, where the population grew slightly. Okinawa has Japan’s highest fertility rate, with women there giving birth to an average of 1.5 children in their lifetimes, compared with 1.1 nationally.

Japan’s biggest cities are managing to stave off demographic decline — for now. The population of the Tokyo metropolitan area, which includes Tokyo and the surrounding prefectures of Kanagawa, Saitama and Chiba, rose slightly to 37 million in 2025. The area now accounts for roughly 30 percent of Japan’s total population.

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Source: Statistics Bureau of Japan

Tokyo, a vibrant hub of business, politics and culture, is now about 20 times denser than the rest of Japan — and one of the world’s densest cities. (Tokyo’s population rose more than 1 percent to 14.2 million in 2025.) The growth has been fueled in large part by an influx of students and young workers looking for jobs and educational opportunities.

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Japan’s woes are likely to worsen in the coming decades. It will probably become increasingly difficult to find workers to staff schools, hospitals, police departments and train stations. And the country could lack enough young people to pay the taxes necessary to support retirees.

Professor Raymo said the Japanese government’s efforts to promote fertility had “not really moved the needle.” He said that ultimately Japan could provide lessons for other governments.

“More and more countries in Asia and elsewhere will experience similar levels of demographic decline,” he said. “Japan is just at the forefront and has been at it much longer.”

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