Stocks Climb as Treasury Yields Ease Ahead of Jobs Report

The final full trading week of 2025 opened on a positive note, with most US stocks and government bonds moving higher as investors positioned themselves ahead of several important economic releases that could influence the Federal Reserve’s next policy steps. Markets appeared cautiously optimistic as Wall Street focused on data that may clarify how soon and how aggressively the central bank could ease interest rates.

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Ahead of the highly anticipated US employment report, more than 300 stocks within the S&P 500 posted gains. The advance reflected growing expectations that signs of cooling in the labor market could give the Fed room to continue loosening policy, a backdrop that investors believe would support corporate earnings and equity valuations.

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Bond markets echoed that sentiment. Treasury yields declined as traders increasingly priced in two interest-rate cuts next year, viewing them as necessary measures to shore up employment conditions even while inflation remains somewhat stubborn.
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At the same time, the US dollar weakened, providing a tailwind for commodities, particularly precious metals such as gold and silver, which often benefit from lower yields and a softer greenback.

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The economic calendar this week is especially dense. Following the Federal Reserve’s most recent rate cut, attention is now turning to the November jobs report scheduled for release on Tuesday.
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Economists expect the data to point to a labor market that is losing momentum rather than collapsing, reinforcing the narrative of gradual cooling rather than outright deterioration.

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Adding another layer of complexity, the report will also include revised estimates for October payrolls. Those figures were delayed due to the federal government shutdown, leaving markets without a complete picture of employment trends over the past two months.
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Investors will be watching closely to see whether the updated numbers confirm a slowdown or reveal more resilience than previously assumed.

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The ripple effects of the longest government shutdown on record are also being felt elsewhere in the economic data flow. Another closely watched indicator, the consumer price index scheduled for release on Thursday, has become part of the broader conversation about how the Fed balances inflation risks against labor-market weakness.

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Despite inflation showing lingering signs of persistence, many market participants believe the central bank’s priority has shifted. The prevailing view is that policymakers are now more concerned about preventing further softening in employment than about driving inflation decisively lower in the near term.

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That dynamic has created what some strategists describe as a “bad news is good news” environment for markets. According to Chris Larkin of E*Trade at Morgan Stanley, softer employment data could actually be welcomed by investors if it strengthens the case for additional monetary easing.

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“With the Fed still appearing to place greater weight on labor-market conditions than on inflation pressures, the jobs report could play out favorably for risk assets,” Larkin said.
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“As long as the data doesn’t point to a sharp or sudden drop in employment, markets may respond positively to weaker numbers because they increase the likelihood of a more dovish policy stance.”

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In that sense, the bar for disappointment may be relatively low. Investors are not necessarily hoping for a strong jobs report, but rather one that confirms a controlled slowdown enough to justify lower rates without signaling a deeper economic problem.

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For now, the combination of falling yields, a softer dollar, and expectations of continued policy support has helped underpin market sentiment. Whether that optimism holds will depend largely on how the upcoming data reshapes the outlook for growth, inflation, and the Federal Reserve’s path in the months ahead.

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