Markets rise in the shortened session for the best month of 2024

Dow rose 263, advancers over decliners about 3-1 & NAZ gained 139.  The MLP index jumped 7 to the 317s & the REIT index added 1 to the 439s.  Junk bond funds went higher & Treasuries had limited buying which reduced yields.  Oil was up fractionally to the 69s & gold gained 19 to 2683.

Dow Jones Industrials

The 10-year Treasury yield retreated to a new low going back to late Oct amid a shortened trading day for US markets following the Thanksgiving holiday.  The yield on the 10-year Treasury slipped just over 2 basis points to 4.219%.  At 1 point, the yield fell as far down as 4.203%, which marked its lowest point since Oct 30.  Meanwhile, the 2-year Treasury shed around 1 basis point, sitting at 4.202%.  1 basis point equals 0.01% & yields & prices move in opposite directions.  Today is a quiet day on the data front, following a flurry of news that came early in the week.  The bond market closes at 2 PM ET after being dark on yesterday for Thanksgiving.  Earlier in the week, the Federal Reserve's preferred inflation measure came in slightly higher on the previous month at 2.3%, in line with the forecast.  Initial claims for unemployment benefits fell more than expected in the latest indication of labor market tightness.  The Fed's Nov meeting minutes, meanwhile, suggested that if price increases & labor data continued to come in roughly as expected, it would be warranted to “gradually” lower interest rates.  However, Pres-elect Trump's threat of quickly passing tariff hikes targeting China, Mexico & Canada are expected by many economists to fuel domestic inflation — & to potentially see the Fed ease policy more cautiously than it otherwise would have.

10-year Treasury yield slides to lowest point since October on holiday-shortened trading day

Markets widely expect the Federal Reserve to cut interest rates for the 3rd time this year at its Dec meeting.  The question is what the central bank will do next year.  Recent sticky inflation data & evidence the US economy is growing at a solid pace have raised doubts that the Fed will bring down rates as quickly as it previously indicated.  In Sep, the Fed's Summary of Economic Projections (SEP) projected 4 interest rate cuts next year.  Markets are currently projecting roughly 2 cuts in 2025 & the Fed is scheduled to release an updated forecast on Dec 18.  While they differ on the specifics, economists generally agree that the central bank's current rapid pace of rate cuts won't continue.  At  4.5% - 4.75%, there's little debate over whether the fed funds rate is restrictive.  This has prompted many economists to believe further easing is likely in the pipeline as the Fed continues to aim for a "soft landing" where inflation falls to its 2% target without a significant downturn in the economy.  With the US economy growing at a solid pace & concerns of a labor market slowdown on the back burner for now, the sticking point in the debate is just how much the Fed will lower rates over the next year without seeing significant improvement in inflation data.

Why Wall Street is betting on slower Fed rate cuts in 2025

The number of Americans filing new applications for unemployment benefits fell again last week, but many laid-off workers are experiencing long bouts of joblessness, keeping the door open to another interest rate cut from the Federal Reserve in Dec.  Initial claims for state unemployment benefits dropped 2K to a seasonally adjusted 213K last week, the Labor Dept reported.  The forecast called for 216K claims.  Claims have retreated from the near 1½-year high seen in early Oct, which was the result of hurricanes & strikes at Boeing (BA), a Dow stock, & another aerospace company.  They are now at levels consistent with low layoffs & a rebound in employment in Nov.  In Oct the storms & recently ended 7-week BA strike reduced the increase in nonfarm payrolls to a paltry 12K jobs.  Despite the anticipated bounce back in payrolls, the unemployment rate is likely to be unchanged or even rise this month.  The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 9K to a seasonally adjusted 1.9M during the latest week.  The elevated continuing claims suggest that many laid off workers are finding it difficult to land new jobs.

US weekly jobless claims decline further

Stocks traded higher to kick off a shortened trading session, with the focus on incoming pres Trump's tariff agenda & the Black Friday shopping rush crucial to retailers.  The last trading day in Nov sees the major gauges on track for monthly wins, despite a pullback in the rally spurred by Trump's decisive election victory. The Trump rally is taking the Dow up a whopping 3700 this month.