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The stock market is getting exactly what it needed in President-elect Trump's pick of Scott Bessent for Treasury Secretary: a rally in the Treasury market that has sent yields lower.
That rally is predicated on a belief that Mr. Bessent, while professing to make an extension of tax cuts a policy priority, will also be focused on taming the rise in the national debt, cutting the budget deficit to 3% of GDP, and advocating for a more gradual implementation of tariffs so that inflation does not take off again.
The 2-yr note yield is down six basis points to 4.31%, the 10-yr note yield is down nine basis points to 4.32%, and the 30-yr bond is down 10 basis points to 4.50%. The U.S. Dollar Index is down 0.8% to 106.65.
Those moves, and Bitcoin approaching $100,000, are like eye candy to the equity futures market, which is in a rally mode that is setting up the cash market for a jubilant start to the abbreviated trading week. Markets will be closed Thursday for Thanksgiving Day and the stock market will close at 1:00 p.m. ET on Friday.
Currently, the S&P 500 futures are up 42 points and are trading 0.7% above fair value, the Nasdaq 100 futures are up 167 points and are trading 0.8% above fair value, and the Dow Jones Industrial Average futures are up 375 points and are trading 0.8% above fair value.
Gains in most of the mega-cap stocks have provided added support, yet a fear of missing out on further gains, a positively pre-disposed seasonal bias, and the drop in market rates are added components that should foster broad-based buying interest when the opening bell rings.
There isn't any economic data of note today, but this holiday week won't be shy of important economic news.
Tuesday features the release of the October New Home Sales Report, the November Consumer Confidence Index, and the FOMC Minutes for the November 6-7 meeting. That lineup will be followed on Wednesday by the October Personal Income and Spending Report, the October Durable Goods Orders Report, Weekly Initial and Continuing Jobless Claims, and the second estimate for Q3 GDP.
The Personal Income and Spending Report will also include the PCE Price Index and core-PCE Price Index, which are the Fed's preferred inflation gauges.
There will also be a slate of earnings reports before the week is out, including results from the likes of Zoom Video (ZM), Abercrombie & Fitch (ANF), Analog Devices (ADI), Best Buy (BBY), Dick's Sporting Goods (DKS), J.M. Smucker (SJM), CrowdStrike (CRWD), Dell (DELL), HP Inc. (HPQ), Nordstrom (JWN), Workday (WDAY), and Autodesk (ADSK).
