New York Stock Market Rallies on 'Moderate' US Treasury Appointments... Dollar Falls, Bonds Rise

Relief Over Vicente's Nomination as Finance Minister
Expect Stable Progress on Tax Cuts and Tariff Increases
October PCE Inflation and Q3 GDP to Be Released on 27th
November FOMC Minutes to Be Announced on 26th

The three major indices of the U.S. New York Stock Exchange showed an early upward trend on the 25th (local time). The market rallied in relief after Donald Trump, the President-elect of the United States, nominated Scott Bessent, CEO of hedge fund Key Square Group, as Treasury Secretary, the economic chief of his second administration. As Bessent is expected to implement Trump’s aggressive tax cuts and protectionist trade measures more realistically, the dollar fell and bond prices rose.

As of 9:33 a.m. in the New York stock market that day, the Dow Jones Industrial Average, centered on blue-chip stocks, was trading at 44,697.85, up 0.91% from the previous trading day. The S&P 500 index, focused on large-cap stocks, rose 0.71% to 6,011.55, and the Nasdaq index, centered on technology stocks, increased 0.83% to 19,161.84.

The stock market rise is analyzed as a result of Wall Street’s relief over the appointment of Trump’s second administration Treasury Secretary. Bessent is known as a veteran Wall Street investor with a high understanding of the market and is considered a stable figure. While he supports Trump’s key campaign promise of tariff policies, he stated in an interview with CNBC shortly after the election, "I suggest gradually imposing tariffs," leading to speculation that he will design policies to minimize shocks to related departments and the market. Trump’s tariff hikes and tax cut policies are expected to prolong inflation and a high interest rate trend, causing the previously rising dollar value and bond yields to weaken.

The dollar index, which shows the value of the dollar against the currencies of six major countries, hit a two-year high on the 22nd but is now trading at around 106.59, down 0.85% from the previous day. As bond prices rise, bond yields are falling. The U.S. 10-year Treasury yield, a global bond yield benchmark, fell 12 basis points (1bp = 0.01 percentage points) from the previous trading day to 4.28%, and the U.S. 2-year Treasury yield, sensitive to monetary policy, traded at 4.29%, down 7 basis points from the previous day.

Ed Mills, a Washington policy analyst at Raymond James, said, "Investors see Bessent’s career as a macro investor helping Trump understand the chain effects of trade, tariffs, taxes, and deregulation agendas," adding, "If Bessent extends tax cuts and promotes deregulation while delaying or limiting tariff policies, it will support U.S. industry and GDP growth and be welcomed by the market."

Colin Graham, Chief Multi-Asset Strategist at Robeco Asset Management, said, "The market can now envision the path of policy," and "Since Bessent appears more moderate on tariffs, this could be positively perceived for bonds." He recommended 'overweight' positions in U.S. stocks and Treasury bonds.

This week, inflation indicators and the minutes of the Federal Reserve’s November Federal Open Market Committee (FOMC) meeting will be released. The U.S. Department of Commerce is expected to announce on the 27th that the October Personal Consumption Expenditures (PCE) price index rose 0.2% month-over-month and 2.3% year-over-year, slightly higher than the 2.1% annual increase in September. The preliminary GDP growth rate for the U.S. third quarter will also be released the same day, expected to confirm solid growth again with an annualized rate of 2.8% compared to the previous quarter.

The November FOMC minutes, released on the 26th, will reveal Fed officials’ economic assessments, outlooks, and views on future monetary policy paths. If the minutes confirm hawkish (monetary tightening preference) messages from Fed officials and last month’s PCE inflation exceeds market expectations, there is a possibility that rates will be held steady in December. The market is weighing the possibilities of a rate cut or a hold next month. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market currently prices in a 55.9% chance that the Fed will cut rates by 0.25 percentage points at the FOMC regular meeting on December 17-18, slightly down from 58.7% a week ago. The chance of holding rates steady rose slightly from 41.3% a week ago to 44.1% on this day.

By stock, Bath & Body Works soared 21.49% on strong earnings and an upward revision of its annual outlook. Macy’s fell 4.42% after revealing that an employee concealed tens of millions of dollars in expenses and announced a delay in its third-quarter earnings report.

International oil prices are falling. West Texas Intermediate (WTI) crude oil dropped $1.04 (1.46%) from the previous trading day to $70.20 per barrel, and Brent crude, the global oil price benchmark, fell $1.02 (1.37%) to $73.61 per barrel.

Meanwhile, this week the New York Stock Exchange will have shortened trading hours due to Thanksgiving. The stock market will be closed on Thanksgiving Day, the 28th, and will close early on the following day, the 29th.