Fed Chairman Jerome Powell hinted at fewer rate cuts through 2025, and any strengthening of that stance could lift Treasury yields and strengthen the dollar. Conversely, indications of greater consensus on easing could lead to bond buying, which could push yields down and weaken the dollar. Stock markets may respond positively to dovish tones, while gold prices could rise if the dollar weakens.
How will Thursday’s market close impact trading volumes?
On Thursday, US stock markets and federal agencies will close in honor of former President Carter’s funeral. The bond markets will operate with limited opening hours. This shutdown will compress economic releases and trading into fewer sessions, potentially increasing volatility around key data.
Traders should expect reduced liquidity, which could amplify price swings, especially in government bond markets and equities. Any significant shift in sentiment after Wednesday’s FOMC minutes could spill over into Friday’s session, making Thursday’s break a crucial reset point for the markets.
Could Friday’s jobs report boost gold, Treasuries and stocks?
Friday’s nonfarm payroll report will likely be the defining event of the week. Economists forecast that the US added 154,000 jobs in December, with the unemployment rate expected to remain steady at 4.2%. This follows a six-month average of 143,000, reflecting a cooling but stable labor market.
A stronger-than-expected report could push Treasury yields higher, boost the dollar and weigh on gold. Stock markets could face downward pressure if traders interpret the data as a reduction in the urgency for further Fed rate cuts. Conversely, weaker job growth could boost expectations for looser policy, lifting bond prices, lifting gold and providing support to stocks.
Market Forecast: Will Jobs Data Drive Near-Term Sentiment?
The combination of FOMC minutes and labor data will shape near-term expectations for Fed policy and market performance. A steady but unspectacular jobs report could maintain the current market equilibrium, with muted optimism for equities and limited moves in Treasury yields. However, significant surprises – both bullish and bearish – could refocus trading strategies, especially for the bond and currency markets.