The U.S. economy continues to defy expectations of a slowdown. Latest reports show that fewer workers applied for unemployment benefits last week than economists had projected, signaling a remarkably durable labor market. This was bolstered by a revised GDP estimate showing faster-than-expected growth during the summer months.
These indicators provided the fuel for Thursday’s rally, with the Dow rising 0.6% and the S&P 500 gaining 0.5%. When combined with November inflation data that met expectations, the narrative of a “soft landing” or continued expansion has gained significant traction among institutional investors.
Consumer spending, the backbone of the U.S. economy, also came in stronger than anticipated. This resilience is a key reason why the market was able to brush off a brief but sharp downturn earlier in the week. It appears that as long as the American consumer keeps spending, the markets have a high floor.
Internationally, the Bank of Japan’s decision to hold rates at 0.75% aligns with a global trend of cautious normalization. While the BoJ is looking to tighten eventually, the current pace is slow enough to avoid stifling the economic momentum seen in the U.S. and parts of Asia.
Despite these positive signs, the bond market remains a area of intense scrutiny. Treasury yields are steady, but the recent volatility in Japanese government bonds serves as a warning. Investors are balancing the “good news” of economic data against the “noisy news” of political trade disputes.