Nasdaq, S&P 500 post record closing highs

NEW YORK – The S&P 500 and Nasdaq eked out record closing highs on Tuesday, with tech-related shares extending recent gains as investors awaited further jobs data.

The Dow finished slightly lower on the day.

Among S&P 500 sectors, technology, communication services, and consumer discretionary were the only gainers, extending their advance on Monday.

Market watchers also digested reassuring comments from Federal Reserve policymakers. Two policymakers said they see inflation heading down to the US central bank’s 2% target and that the job market is “solid.”

They stayed away from signaling whether they would support another interest rate cut later this month. On Monday, Fed Governor Christopher Waller said he was inclined “at present” to support another rate cut this month.

Investors will pay close attention to the US monthly employment report on Friday. They also are keen to see other data this week, including a November reading of private payrolls and the Institute for Supply Management’s services report.

“The market is kind of waiting for the big data, which would be ISM and the (employment report) on Friday … so people are sitting on their hands a little bit,” said Paul Nolte, senior wealth advisor and market strategist for Murphy & Sylvest in Elmhurst, Illinois.

A report on Tuesday showed US job openings increased solidly in October while layoffs dropped by the most in 1-1/2 years.

Financial markets expect a roughly 72% chance of a 25-basis-point rate cut at the Fed’s Dec. 17-18 policy meeting, CME Group’s FedWatch tool showed.

Shares of Amazon rose 1.3%. The company announced a new slate of artificial intelligence platforms, known as foundation models, at its annual AWS conference.

The Dow Jones Industrial Average fell 76.47 points, or 0.17%, to 44,705.53, the S&P 500 gained 2.73 points, or 0.05%, to 6,049.88 and the Nasdaq Composite gained 76.96 points, or 0.40%, to 19,480.91.

The S&P 500 advanced 5.7% in November as former US President Donald Trump recaptured the White House in the Nov. 5 election and his Republican Party swept both houses of Congress. The index is up roughly 27% for the year to date.

“This is a market that has performed extremely well. You want it to pause, take a breather and wait for another catalyst to push it higher,” said Quincy Krosby, chief global strategist, LPL Financial in Charlotte, North Carolina.

The Dow transportation average fell 2% in its biggest daily percentage drop since September.

US-listed shares of South Korean companies also declined, with iShares MSCI South Korea ETF easing 1.6%.

South Korean President Yoon Suk Yeol said he would move to lift a martial law declaration he had imposed just hours before that unnerved world markets.

Shares of Tesla declined 1.6% after data showed the automaker’s sales of China-made electric vehicles fell 4.3% year-on-year to 78,856 in November.

After the closing bell, Salesforce shares rose about 7% following the release of its results, including stronger-than-expected quarterly revenue. The stock ended the regular session 0.1% higher.

Declining issues outnumbered advancers by a 1.24-to-1 ratio on the NYSE. There were 310 new highs and 50 new lows on the NYSE.

On the Nasdaq, 1,647 stocks rose and 2,732 fell as declining issues outnumbered advancers by a 1.66-to-1 ratio.

Volume on US exchanges was 12.70 billion shares, compared with the 14.81 billion full-session average over the last 20 trading days.

(Reporting by Caroline Valetkevitch; additional reporting by Shashwat Chauhan and Purvi Agarwal in Bengaluru; Editing by Maju Samuel and Richard Chang)

Oil rises on fears about Lebanon, further OPEC+ supply cuts

NEW YORK – Oil prices rose more than 2% on Tuesday as Israel threatened to attack the Lebanese state if its truce with Hezbollah collapses, and as investors positioned for OPEC+ to announce an extension of supply cuts this week.

Brent crude futures posted their biggest gains in two weeks, rising by USD 1.79, or 2.5%, to settle at USD 73.62 a barrel. US West Texas Intermediate crude futures also rose the most since Nov. 18, gaining USD 1.84, or 2.7%, to close at USD 69.94 per barrel.

Israeli forces have continued strikes against what they say are Hezbollah fighters ignoring last week’s truce agreement in Lebanon. Top Lebanese officials have urged Washington and Paris to press Israel to uphold the ceasefire.

The risk to the ceasefire has some oil traders worrying more about tensions in the Middle East, UBS analyst Giovanni Staunovo said.

While the Lebanon conflict has not resulted in oil supply disruptions, traders will closely track tensions between Iran and Israel over the coming months, Staunovo added.

Also supporting oil prices, the Organization of the Petroleum Exporting Countries and allies will likely extend output cuts when OPEC+ meets on Thursday.

The group is likely to extend supply cuts until the end of the first quarter next year, four OPEC+ sources told Reuters.

OPEC+, which accounts for about half of the world’s oil production, has been looking to gradually unwind supply cuts through next year. However, the prospect of a market surplus has pressured oil prices, with Brent trading nearly 6% below its average for December 2023.

An extension of OPEC+ supply cuts will limit the market surplus and provide the oil market a softer landing than most forecasts expected, Scott Shelton, energy analyst at TP ICAP told clients in a note.

“Given a rise in compliance with production cuts from Russia, Kazakhstan and Iraq, the lower Brent price level and indications in press reports, we assume an extension of OPEC+ production cuts til April,” Goldman Sachs analysts said in a note.

The global oil demand outlook remains weak and China’s crude imports are likely to peak as early as next year as demand for transport fuel begins to decrease, researchers and analysts said.

US crude oil inventories rose 1.2 million barrels in the week ended Nov. 29, market sources said citing data from the American Petroleum Institute. Fuel stocks also rose, they said.

Rising inventories typically indicate weak demand.

Official data on oil stocks from the US Energy Information Administration is due Wednesday at 10:30 a.m. ET (1530 GMT). Analysts polled by Reuters expect a 700,000 barrel decline in crude stocks.

“Oil is not going to be in short supply next year,” Francisco Blanch, head of global commodities at BofA Securities told reporters. “Demand growth rates will slow in 2025, and we cannot count on China to account for half the global oil demand,” he said.

“(Oil) prices will roll down a bit,” he said.

(Reporting by Shariq Khan, Robert Harvey, Enes Tunagur, Florence Tan, Colleen Howe; Editing by Jonathan Oatis and Stephen Coates)

Longer-dated US Treasury yields rise on jobs openings

NEW YORK, Dec 3 (Reuters) – Longer-dated US Treasury yields rose on Tuesday after labor market data showed an increasing number of unfilled jobs, but demand remained high at the short end as investors seeking safe haven from geopolitical uncertainty in Asia bought Treasuries.

US job openings increased moderately in October while layoffs declined, suggesting the labor market continued to slow in an orderly fashion. Job openings, a measure of labor demand, rose 7.744 million by the last day of October, the Labor Department’s Bureau of Labor Statistics said in its Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday. Layoffs decreased 169,000 to 1.633 million.

After South Korean President Yoon Suk Yeol on Tuesday declared martial law, the country’s currency tumbled to a two-year low and investors fled to low-risk assets such as Treasuries. The president agreed to lift the martial law decree after parliament rejected it.

The yield on the benchmark US 10-year Treasury note rose 0.5 basis point to 4.199%. The two-year US . Treasury yield, which typically moves in step with interest rate expectations, fell 4.7 basis points to 4.151%.

The part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes , seen as an indicator of economic expectations, steepened to 4.6 basis points.

Two Federal Reserve policymakers on Tuesday said they believe inflation is heading down to the US central bank’s 2% target and the job market is solid, even as neither gave any clear steer on whether they’ll support another interest rate cut later this month.

Fed Governor Adriana Kugler and San Francisco Fed President Mary Daly did not indicate at public events on Tuesday whether they favor a rate cut at the central bank’s Dec. 17-18 policy meeting, but both said they will be looking closely at the release on Friday of the US employment report for November.

The odds of a 25-bp easing this month were at 72% on Tuesday afternoon, slightly down from 75% late on Monday, according to CME’s FedWatch.

On Monday, Fed Governor Christopher Waller said he was leaning toward another rate cut. Fed Chair Jerome Powell on Wednesday will give what are expected to his last public remarks before the meeting. Wednesday will also see additional job market data with the ADP National Employment Report.

“Yields went up a couple of basis points after the JOLTS report, but markets do not think a higher job creation number changes the Fed’s view as expressed by Governor Waller on Monday“, said Angelo Manolatos, macro strategist at Wells Fargo.

Lou Brien, strategist at DRW Trading in Chicago, also noted the safe haven effect. “There might have been a little bit of a bid in Treasuries, sort of a safety play there, because it looks like people are getting out of South Korean ETFs.”

The breakeven rate on five-year US Treasury Inflation-Protected Securities (TIPS) was last at 2.383% after closing at 2.351% on Tuesday. The 10-year TIPS breakeven rate was last at 2.292%, indicating the market sees inflation averaging about 2.3% a year for the next decade.

(Reporting by Tatiana Bautzer; Editing by Nick Zieminski and Jonathan Oatis)

South Korea’s martial law confusion deepens caution

Dec 4 (Reuters) – A look at the day ahead in Asian markets.

A sudden burst of political chaos in South Korea has put investors in Asia on the defensive, pointing to a cautious market open across the continent on Wednesday despite Wall Street’s resilience the previous day.

South Korea’s President Yoon Suk Yeol declared martial law on Tuesday to thwart “anti-state forces” among his opponents, creating the most serious challenge to the country’s democracy since the 1980s, only to lift it hours later after lawmakers rejected the move and protesters gathered outside parliament.

The initial declaration had an immediate impact on the won, slamming it to a 2-year low against the dollar. At one point, it was down 2% and set for its biggest one-day loss since Nov. 9, 2016, the day after the 2016 US election that swept Donald Trump to power and started the clock ticking on a looming trade war with China.

This cemented the won’s unwanted status as the worst-performing major Asian currency against the dollar this year, bringing its year-to-date losses to nearly 10%. The benchmark Kospi is also one of the worst-performing equity indexes in Asia this year, down nearly 6% year-to-date at Tuesday’s close.

Yoon’s about face, however, appears to have restored a sense of calm. The won is still weaker but reclaimed more than half its losses from earlier on Tuesday. Kospi futures traded on the Eurex exchange are pointing to a fall at the stock market open in Seoul of only around 0.3%.

Elsewhere in Asia, India’s rupee is at a record low, while China’s yuan is at a 13-month low and seemingly poised for a break below 7.30 per dollar, as traders speculate Beijing is allowing it to slide as trade tensions with Washington heat up.

China on Tuesday announced a ban on exports of ‘dual-use items’ related to key minerals gallium, germanium, antimony and superhard materials to the United States. This came 24 hours after the US launched a third crackdown in three years on China’s semiconductor industry, curbing exports to 140 firms.

If volatility in key assets across Asia is spiking, US market volatility right now is pretty subdued. The VIX ‘fear index’ on Tuesday hit its lowest since July, and the MOVE index of implied volatility in US Treasuries has tumbled since the US presidential election to a two-month low.

The Asian calendar on Wednesday sees the release of Australian GDP, Thai inflation, and a raft of purchasing managers index reports for November, including China’s Caixin services PMI.

Australia’s economy is expected to have expanded at a 0.4% pace in the July-September period, twice the rate of the previous quarter, and at a 1.1% year-on-year pace, a marginal uptick from the 1.0% annual growth registered in Q2.

(Reporting by Jamie McGeever; Editing by Bill Berkrot)

Oil steady, traders hopeful on China demand but worried about Fed

HOUSTON – Oil prices were little changed on Monday, as hopes of stronger demand stemming from higher factory activity in China was largely offset by concerns that the US Federal Reserve will not cut interest rates again at its December meeting.

Brent crude futures settled 1 cent lower at USD 71.83 a barrel. US West Texas Intermediate crude rose 10 cents, or 0.15%, to USD 68.10.

A private sector survey showed China’s factory activity expanded in November at the fastest pace in five months, boosting Chinese business optimism just as US President-elect Donald Trump has ramped up trade threats.

Meanwhile, a ceasefire between Israel and Lebanon, which took effect last Wednesday, appeared increasingly fragile. The Israeli military said on Monday it was currently striking “terror” targets in Lebanon amid mutual accusations of ceasefire violations between Israel and the Lebanese armed group Hezbollah.

The Pentagon said that despite some incidents, the ceasefire between Israel and Lebanese armed group Hezbollah was holding.

“Increased geopolitical risks remain. Even though the ceasefire is underway in Israel, it seems evident that there are some misconceptions about the legitimacy of the ceasefire,” said Dennis Kissler, senior vice president of trading at BOK Financial.

Traders also watched developments in Syria, weighing whether recent escalation could widen tensions across the Middle East and affect supply.

Both crude benchmarks fell more than 3% last week, pressured by easing supply concerns from the Israel-Hezbollah conflict and 2025 surplus forecasts, despite expected sustained output cuts.

The Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, postponed the group’s next meeting to Dec. 5. It will discuss delaying a planned oil output increase scheduled to start in January, OPEC+ sources told Reuters last week.

“Attention will be on the potential delay of the planned production hike, as an indefinite delay could alleviate downward pressure on prices,” said George Pavel, general manager at Naga.com Middle East.

This week’s meeting will decide policy for the early months of 2025.

“Money managers are sitting on the fence … the market is looking for clarity between the implication of the forthcoming Trump administration and OPEC+ supply policy,” said Harry Tchilinguirian at Onyx Capital Group.

Pressuring oil prices, Atlanta Federal Reserve President Raphael Bostic said he has an open mind about whether to cut interest rates again at the Fed’s December meeting, with upcoming data on jobs important in shaping the decision.

Higher interest rates increase the cost of borrowing, which can slow economic activity and dampen demand for oil.

Also pressuring oil, the dollar pushed higher again, after Trump on Saturday threatened 100% tariffs on BRICS member countries unless they commit to not creating a new currency or supporting another currency that could replace the dollar.

A stronger greenback makes dollar-denominated oil more expensive for investors holding other currencies, hurting demand.

(Reporting by Arunima Kumar in Bengaluru, Enes Tunagur in London and Florence Tan, and Gabrielle Ng in Singapore; Editing by Jason Neely, David Goodman, Jonathan Oatis, and David Gregorio)

Tesla leads November’s global market value surge

Tesla’s market capitalization increased by the most among top global companies in November, boosted by expectations the automaker will benefit from CEO Elon Musk’s close ties with US President-elect Donald Trump.

The company’s market value surged 38.1% to USD 1.1 trillion last month on reports that Donald Trump’s transition team plans to relax federal regulations on self-driving cars, potentially simplifying the rollout of autonomous vehicles.

Optimism around holiday shopping helped boost Walmart’s market value by 12.9% to USD 743.5 billion, following the company’s third upward revision of its annual sales and profit forecasts, driven by increased online and in-store purchases of groceries and merchandise.

JPMorgan Chase’s market value rose 12.5% to USD 703 billion, as it was announced that CEO Jamie Dimon will continue leading the bank, and investors are confident that Trump will bring favorable policies for lenders.

Improving retail sales pushed Amazon.com’s market value up 11.5% to USD 2.2 trillion, after it reported higher-than-expected profit growth. Similarly, Visa saw its market value increase by 8.3% to USD 617.5 billion, as resilient consumer spending pushed it to a strong fourth-quarter profit.

Reports that US authorities ordered Taiwan Semiconductor Manufacturing Company 2330.TW to halt shipments of advanced chips to China, a move aimed at curbing exports of critical technologies, helped wipe 5.1% off its market cap, which fell to USD 793.5 billion.

AI bellwether Nvidia’s market value rose by a modest 3.9%, slowing from October’s 9.3% increase as its revenue growth forecast failed to excite investors.

(Reporting By Patturaja Murugaboopathy and Gaurav Dogra in Bengaluru; Editing by Kirsten Donovan)

S&P 500, Nasdaq post record highs as tech-related shares gain

NEW YORK – The Nasdaq and S&P 500 scored record closing highs on Monday, boosted by tech-related shares following the market’s strong November gains, as investors awaited this week’s economic data including the key monthly jobs report on Friday.

The Dow finished lower on the day. Both the Dow and S&P 500 recorded on Friday their biggest monthly percentage gains in a year.

The technology, communication services, and consumer discretionary sectors rose about 1% each on Monday, while the rest of the S&P 500 sectors were lower. Tesla shares advanced 3.5%, with Stifel raising its price target on the stock.

“We’re seeing a market that’s in a seasonably strong period just creep higher,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

“It’s a tough time for people to bail out, but by the same token, I don’t see an explosive finish to the year. There’s just too much uncertainty as to where we’re headed. … No one is quite sure what the plan is economically with the new administration.”

Former US President Donald Trump recaptured the White House in last month’s election and his Republican Party swept both houses of Congress, boosting stocks in November.

The Dow Jones Industrial Average fell 128.65 points, or 0.29%, to 44,782.00. The S&P 500 rose 14.77 points, or 0.24%, to 6,047.15 and the Nasdaq Composite climbed 185.78 points, or 0.97%, to 19,403.95.

Strategists have cited Trump’s potential plans for tax cuts and deregulation as a positive for stocks, but tariffs would be negative.

Investors also digested comments from Federal Reserve Governor Christopher Waller that he was inclined to cut the benchmark interest rate at the Dec. 17-18 meeting as monetary policy remained restrictive.

Investors have been expecting a quarter-point rate cut in December, but recent inflation data has raised worries that progress may have stalled.

The Fed began reducing rates in September by half a point, following that with a quarter-point cut in November.

Earlier on Monday, the Institute for Supply Management reported improved US manufacturing activity in November.

Aside from Friday’s hotly anticipated employment report, investors this week also will see private sector job growth data, the ISM’s services report, and the Labor Department’s weekly jobless claims.

Super Micro Computer surged 28.7% after the artificial intelligence server maker began searching for a new finance chief based on recommendations by a special committee formed to review its accounting practices.

Declining issues outnumbered advancers by a 1.08-to-1 ratio on the NYSE. There were 406 new highs and 64 new lows on the NYSE.

On the Nasdaq, 2,332 stocks rose and 2,060 fell as advancing issues outnumbered decliners by a 1.13-to-1 ratio.

Volume on US exchanges totaled 13.64 billion shares, compared with the 14.74 billion full-session average over the last 20 trading days.

(Reporting by Caroline Valetkevitch; Additional reporting by Shashwat Chauhan and Purvi Agarwal in Bengaluru; Editing by Maju Samuel and Richard Chang)

US yields little changed as Fed’s Waller points to December rate cut

NEW YORK – US Treasury yields were little changed on Monday, after trading higher for most of the session, as Federal Reserve Governor Christopher Waller said he was inclined to cut the benchmark interest rate at the Dec. 17-18 policy meeting.

The yield on the benchmark US 10-year Treasury note, which was up earlier after manufacturing data releases in the morning, pared gains to 4.197%, slightly up on the day, after Waller’s comments. The US two-year yield, which typically moves in step with interest rate expectations, was up 1.2 basis points at 4.182%.

Yields on the long end of the curve slipped, with those on US 30-year bonds down marginally at 4.368%.

“Policy is still restrictive enough that an additional cut at our next meeting will not dramatically change the stance of monetary policy and allow ample scope to later slow the pace of rate cuts, if needed, to maintain progress toward our inflation target,” Waller said in comments at a central bank symposium organized by the American Institute for Economic Research.

Waller compared the Fed’s battle with inflation to a mixed martial arts fighter in that sport’s unique arena. “Let me assure you that submission is inevitable — inflation isn’t getting out of the octagon.”

Ellis Phifer, managing director for fixed income capital markets at Raymond James in Memphis, said Waller’s comments were seen as reassuring. “His comment showed a stronger than usual support for a rate cut, but we still have to see what the jobs data will show later in the week.”

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an economic outlook indicator, flattened slightly to 0.8 bp, compared with 1.4 bps late on Friday.

The overall flattening was earlier driven by the positive US data, which had initially reduced the odds of a 25-bp cut by the Fed later this month. That has since been offset by Waller’s comments.

Following Waller’s remarks, the markets raised the odds of a 25-bp easing this month to 75%, from 66% late on Friday, according to CME’s FedWatch. At the same time, rate futures reduced the chances of a Fed pause to 25% from 34% on Friday.

Earlier on Monday, Treasury yields rose modestly after data showed that the Institute for Supply Management’s manufacturing PMI increased to 48.4 last month from 46.5 in October, above the 47.5 economists polled by Reuters had forecast.

Analysts looking closely at the manufacturing data saw some signs of weakness not evident in headline numbers. Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin, said the headline improved, but details were disappointing, with 66% of manufacturing GDP contracting in November.

“The most important thing was the unexpected drop at the prices paid by manufacturers; that’s an interesting anecdote that could influence inflation indexes ahead,” said Vail Hartman, analyst on the US Rates Strategy team at BMO Capital Markets.

Meanwhile, this week’s slew of US employment data begins on Tuesday, with job openings in October, followed by the November ADP national employment report on Wednesday. The US nonfarm payrolls report will be out on Friday.

Although the focus is on the short-term FOMC decision, markets are also trying to estimate the longer-term interest rate level.

“We’ve already heard many Fed officials say their estimates of neutral policy this cycle has changed. The destination of policy over the next eighteen months and onward will matter a lot more for Treasuries at the long end of the curve than what happens this month,” said Will Compernolle, macro strategist at FHN Financial, in a research note.

(Reporting by Tatiana Bautzer; additional reporting by Chuck Mikolajczak; editing by Jonathan Oatis)

Buoyant dollar keeps bulls in check

Investors in Asia go into Tuesday’s session with a spring in their step following the upswing in global stocks and risk appetite on Monday, but wary that the buoyant US dollar can extinguish that optimism in a flash.

Also keeping regional sentiment in check will be unease around China’s economic predicament, even though purchasing managers index data over the last 72 hours showed that factory activity in November expanded at the fastest pace in months.

Much of that – the pickup in Chinese manufacturing activity, deepening disquiet about the outlook, and the dollar’s renewed vigor – is tied to US President-elect Donald Trump’s hardline stance on trade and threats of heavy tariffs when he takes office next month.

His social media broadside on Saturday to countries contemplating backing away from the “mighty” US dollar appears to have had an initial effect. Excluding Nov. 6, the day after the US election, the dollar’s 0.6% appreciation on Monday was its biggest rise in six months.

Europe’s economic and political travails, especially in France, are certainly at play, while the yen is drawing support from bets that the Bank of Japan could raise interest rates later this month.

But the dollar’s independent strength cannot be ignored, and bullish sentiment toward emerging markets is rarely sustained for long when the dollar is on the march.

Nor can China’s weakness be ignored. Some analysts say the positive PMI surprises are due to a ramp up in production before tariffs from Washington are levied, and China’s underlying economic health remains fragile.

China’s bond market would appear to back up that assertion. The 10-year yield on Monday fell below 2% for the first time, while the 30-year yield is now below its Japanese equivalent for the first time in at least 20 years.

Still, investors will draw comfort from the S&P 500 and Nasdaq’s rise to fresh peaks on Monday, and US Federal Reserve Governor Christopher Waller saying he is leaning toward a rate cut later this month.

Remarkably, after Monday’s spike the S&P 500 has registered more than 50 record highs this year. But will that be enough to lift Asian markets on Tuesday?

Asia’s calendar on Tuesday is light, with South Korean inflation the only major economic indicator on tap. It is one of several CPI releases this week following Indonesia’s on Monday and ahead of the latest snapshots from the Philippines, Taiwan and Thailand later in the week.

Economists polled by Reuters expect South Korea’s annual rate of headline inflation in November to accelerate to 1.7% from a three-and-a-half-year low of 1.30% in October. That would mark the biggest jump since August last year.

Here are key developments that could provide more direction to markets on Tuesday:

– South Korea consumer inflation (November)

– Bank of Thailand governor Sethaput Suthiwartnarueput speaks

– Thailand’s finance minister Pichai Chunhavajira speaks

(Reporting by Jamie McGeever; Editing by Bill Berkrot)

US bonds extend rally in holiday shortened session

NEW YORK – US Treasury yields dropped amid thin trading during the holiday-shortened market session on Friday, extending a weekly bond rally spurred by optimism about the new US Treasury secretary and some respite from inflation concerns.

Benchmark 10-year yields dipped to an over one-month low, while two- and thirty-year yields hit their lowest in over three weeks, partly because of holiday-week effects after Thanksgiving on Thursday as well as month-end investor flows.

“Month-end positioning is likely to be playing a role, particularly going into the long US Thanksgiving weekend, which is likely to have led to some increased demand for Treasuries,” said David Page, head of macroeconomic research at AXA Investment Managers.

The move lower in yields, which decline when prices rise, indicated further unwinding of the trades linked to Donald Trump’s win in the US presidential election, which had put downward pressure on bonds in previous weeks because of expectations for higher deficits and inflation during a second Trump presidency.

This week’s rally began after Trump named Scott Bessent as Treasury secretary last Friday and gained momentum after a string of well-received Treasury auctions as well as inflation data in line with estimates.

“The nomination of Bessent as US Treasury secretary … has eased fiscal concerns,” said Diana Iovanel, senior markets economist at Capital Economics.

For Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors, Trump’s selection of Bessent suggested “economic rationality, potentially tempering fears of inflationary policies, possibly with a measured implementation of tariffs.”

Benchmark 10-year yields were last seen at 4.176%, their lowest since Oct. 25. Two-year yields, which more closely reflect monetary policy expectations, stood at 4.163%, their lowest since Nov. 5.

“It’s been a one-way slide lower in yield since the Asia reopen, though light flows have magnified the moves to a degree,” analysts at Citi wrote in a note early on Friday.

Since the beginning of November, 10-year yields have declined by about 10 basis points while two-year yields were roughly unchanged by the end of the month. Further out, 30-year yields have declined by about 11 basis points since the beginning of November to 4.366% on Friday.

The closely watched curve comparing two- and 10-year yields was last at 1.7 basis points, flatter than on Thursday – meaning the premium of long-term yields over shorter-ones was smaller.

That part of the curve inverted earlier this week for the first time in over a month, with two-year yields briefly higher than the 10-year. A curve inversion is a bond market signal of a possible economic contraction in the future.

US stock and bond markets were open for a half-day on Friday. The sustainability of this week’s decline in yields might become clearer once the new month starts next week.

For Page at AXA Investment Managers the weeks ahead will continue to be volatile as speculation mounts over the next US administration’s policies.

“Bonds look expensive to us at these yields,” he said.

(Reporting by Davide Barbuscia; editing by Jonathan Oatis and Diane Craft)

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