BONDS: Light Selling Creeps In

• Stocks are trading moderately weaker early Monday, as Information Technology and Communication Services sector shares helped lift major averages off lows. Currently, the DJIA trades down 249.99 points (-0.58%) at 42589.08, S&P E-Minis down 17 points (-0.28%) at 5985.25, Nasdaq up 30 points (0.2%) at 19602.4.
• Consumer Staples and Materials sectors underperformed in the first half, retail distribution shares lagging into the Christmas holiday: Walmart -3.22%, Dollar General -2.51%, Walgreens Boots Alliance -2.15%.
• Chemicals and mining shares weighed on the Mining sector: FMC Corp -1.81%, Corteva -1.68%, International Flavors & Fragrances -1.31% while Newmont traded -1.29%.
• Semiconductor makers outperformed in the first half with Advanced Micro Devices gaining 5.17% after Rosenblatt named AMD, Meta and Micron as it's top picks for the first half of 2025. Meanwhile, Microchip Technology +3.66%, Broadcom +3.37% while Intel gained 2.72%.
• Interactive media and entertainment shares buoyed the Communication Services sector with the aforementioned Meta gaining 1.24%, News Corp +0.54%, Take Two Interactive Software +0.15%.

Roi Kais at Kan reporting on X, per Saudi-owned Al-Sharq TV channel, that "there is significant progress," toward a ceasefire-for-hostage deal, "but there are still issues in dispute."

• Kais notes that, according to "informed Palestinian sources", Israel has agreed for the first time in the negotiations to "withdraw some of its forces from the Philadelphia axis, and also to withdraw completely from the Netzarim axis." 
• Reuters notes that Israeli Prime Minister Benjamin Netanyahu said there is a "certain advancement" in negotiations, adding "we are not turning a blind eye to Iran."
• A senior Palestinian official told the BBC on December 21 that talks to reach a Gaza deal are 90% complete, but key issues remain that need to be bridged, including "the continued Israeli military presence in the Philadelphi corridor." The BBC noted, if these issues were to be resolved, "a three-stage ceasefire could be agreed within days."
• Reuters summarised earlier today: "A fresh bid by mediators Egypt, Qatar and the United States to end the fighting and release Israeli and foreign hostages has gained momentum this month, though no breakthrough has yet been reported."

Consumer confidence unexpectedly pulled back in December after reaching a 3-year high in November, with the Conference Board's index dropping to a 3-month low 104.7 (113.2 survey) from 112.8 (rev from 111.7). This was largely down to expectations fading, to 81.1 from 93.7; "present situation" was fairly steady, dipping to 140.2 from 141.4.

• However, the closely-watched labor differential metric (jobs plentiful minus jobs hard to get) improved for the 3rd consecutive month to 22.2 from 18.4, for the highest reading since May. That included 37% saying jobs were "plentiful", and just under 15% saying jobs were "hard to get", respectively the highest and lowest since May.
• We don't take great signal from the headline confidence figures, as they are volatile (the latest reading being impacted by concerns over potential government policy shifts including tariffs), and the level is broadly consistent with continued robust consumption rather than any change in trend.
• But the labor market differential continues to point to a cooling but not rapidly deteriorating labor market. Overall it suggests that the trend increase in the unemployment rate will remain fairly slow.