By Stefan Koopman, Senior Macro Strategist at Rabobank

With Christmas approaching, Home Alone offers a fitting image to start this Global Daily: Kate McCallister, flying high in seats that by today’s standards look very comfy, suddenly shrieks “KEVIIIIINNNN” when she realizes she has left her son behind. Kevin Hassett’s fast climb toward the Fed chair resembles such a flight: a strong ascent, apparently some nice tailwinds, and then a moment of doubt as he may have flown too close to the sun.

Just as Icarus overreached, high visibility and scrutiny can bring Kevin Hassett down too. Recent media reports suggest the field is open again, with former Fed governor Kevin Warsh back in the running. The question is whether this Kevin represents an upgrade.

Indeed, Warsh’s record is at odds with the White House’s policy agenda. As governor, he pushed for rate hikes even as the U.S. economy plunged into recession, he opposed key tools to expand the balance sheet to deal with the financial crisis and then he warned of inflation that – if you’re generous – arrived about 13 years late. His critique of the Fed aligns with Friedman’s free-market and limited-government ideals, and also a very narrow interpretation of the Fed’s remit. While this is at least internally consistent, his calls were wrong at nearly every major turning point in the economy.

More problematically, his current fixation on balance-sheet reduction (while the Fed has shifted to an ample reserves framework) should be read less as an intellectually coherent framework and more as political positioning. It offers an easy way to sound hawkish and serious about inflation while providing cover to later advocate for the rate cuts this White House wants. His logic only works if fiscal deficits shrink substantially – and here we can think of Clinton-era Rubinomics – but Trump and Bessent have shown zero interest in deficit reduction.

Perhaps his candidacy is floated simply to make Hassett look better. Either way, everything Warsh says now must also be viewed through the lens of ambition. If appointed, the hard-money man could go soft, not out of conviction, but because doing the president’s bidding becomes part of the job. So if Hassett’s risk is proximity to the sun, Warsh’s risk is opportunism. Markets may conclude that neither choice secures the Fed’s long-term credibility on inflation expectations and central bank independence.

Meanwhile, Governor Miran offered a detailed inflation outlook to explain why he voted for a 50bp cut at last week’s meeting. He sees underlying price pressures closer to the Fed’s 2% target than the headline rate suggests, citing expected deceleration in shelter inflation as the PCE’s lagged metric catches up with flat market rents, and the way portfolio management fees are imputed from rising asset prices. He also argued against blaming tariffs for the rise in core goods inflation. While he wasn’t able to provide alternative facts, he did suggest that goods price inflation may settle at a structurally higher level than pre-pandemic norms, largely driven by efforts to strengthen supply-chain security and resilience.

Helpfully for both Kevins and Stephen, the near-term inflation picture looks more benign. Crude oil fell to a two-month low yesterday, helped by optimism around a potential deal to end the war in Ukraine that would lift restrictions on Russian flows. With WTI at $56.4 per barrel in an oversupplied market, with unemployment rising and wage growth easing, and rental inflation indeed largely flat, outside of tariffs there’s only the AI-boom that looks to keep inflation elevated in 2026. That would mean that the hawkish case to not cut rates at all in 2026 largely rests on the absence of a clear path to deceleration to the 2% target.

Today is busy in terms of data.

The UK labor market data for October/November kicks off the morning. Conditions have weakened sharply in 2025: vacancies fell first, now employment is declining. Soft demand combined with rising labor supply has pushed unemployment to a four-year high of 5%, slowing private-sector pay growth. This reduces concerns about inflation persistence. If today’s report confirms the trend, the path is clear for further Bank of England easing at this week’s meeting and into early 2026.

In Europe, attention turns to the latest political psychodrama ahead of the Mercosur vote expected later this week. France is reportedly pushing to delay (or possibly derail) the process to revisit its long-standing concerns one more time, while supporters warn that another pause could kill the deal altogether. Also on the agenda this morning are the December PMIs. The Eurozone composite PMI is forecast at 52.6, slightly below November’s 52.8, but that would still indicate that the economy continues to expand modestly despite weak foreign demand. The UK reading may improve from November’s 51.2, partly reflecting the lifting of uncertainty after the Budget. Last Friday’s GDP data suggested the economy stagnated through most of the second half of 2025.

The FOMC meeting a week ago was about as market-friendly as it could reasonably get. Even so, Chair Powell reiterated that policy settings are now close to neutral, raising the bar for additional easing in the near term. Futures still price about a 60% chance of a 25bp cut in March. That stance faces a test this week as today’s November payrolls and Thursday’s CPI highlight the Fed’s conflicting mandate.

Today’s jobs report is unusual. It not only arrives on a Tuesday but also reflects distortions from the longest U.S. government shutdown. The BLS will publish October and November payrolls simultaneously, though markets will probably just focus on November. The unemployment rate, based on the household survey, covers only November. Data collection started after the shutdown’s end on November 12. The BLS warns of slightly increased standard errors due to technical issues with the sample itself, with a lot of first-time survey respondents that typically report higher unemployment rates than more experienced respondents. This suggests a small upward bias and makes the print a bit of a wildcard.

Consensus sees November payrolls slightly below trend at +50k and unemployment at 4.4–4.5%, a just-about-right print that would temper labor concerns while preserving optionality for cuts. A weaker print could spur risk-off moves: equities lower, a softer dollar, and flows into cash and Treasuries.

Finally, October retail sales are expected to rebound, with the control group up 0.4% after September’s 0.1% drop. Tariff-sensitive categories such as autos, electronics, and apparel are under pressure, while service-related spending still looks firm. For October, some retailers flagged a negative impact from the government shutdown, only reinforcing the “K-shaped” narrative Chair Powell talked about in last week’s press conference.

Loading recommendations...