The S&P 500 closed at a record high on Thursday, ending the day at 6,502, up 0.83%, after a late-afternoon rally powered stocks across the board.
Wall Street traders pushed through weaker-than-expected job numbers from the private sector and placed big bets that Friday’s government jobs data will open the door for a Federal Reserve rate cut.
According to Bloomberg, traders want a number that justifies easing without triggering panic about a slowdown. The Nasdaq Composite gained 0.98% to finish at 21,707.69, while the Dow Jones Industrial Average closed up 350.06 points, or 0.77%, at 45,621.29.
The decision came hours after the ADP private payrolls report showed just 54,000 new jobs for August , well below the 75,000 economists were expecting, and the number was also down from the revised 106,000 in July.
Instead of tanking the market, the weak result lit up traders who now see it as soft enough for the Fed to act, but not bad enough to scream recession.
Fed rate cut bets explode after ADP report
Markets responded instantly. Traders raised the odds of a rate cut on September 17 to 97%, based on CME Group’s FedWatch tool. They’re pricing in the idea that the Fed now has enough cover to make a move.
Equities moved higher across sectors on the idea that weak data means looser policy, the scenario traders have been waiting on for months.
The United States is running on surging debt, rising deficits, and growing interference in the central bank’s independence.
Despite all that noise, the U.S. Treasury market has held its ground, with the 10-year yield having dropped more than a third of a point this year, standing in contrast to higher yields in the UK, France, and Japan, where investors have pulled out amid fiscal concerns.
10-year U.S. Treasury yields have dropped over 0.33% this year, beating every other major bond market. Even 30-year U.S. bonds only went up about 0.125% in 2025, way less than the 0.5% spike in the UK, 0.75% in France, and a full 1.0% in Japan. While Europe and Asia struggled with rising debt fears, U.S. bonds stayed firm.
Bond volatility has also been fading. A key measure of Treasury market swings is now sitting close to its three-year low, showing that traders aren’t panicking… yet. That’s despite all the pressure Washington is putting on the Fed to keep rates low and borrowing cheap.
Ed Yardeni, founder of Yardeni Research, said, “The bond market has been calm.” He added that even with heavy fiscal overhang and political meddling, the U.S. still “does stand out as remarkably stable.” Yardeni is known for coining the term “bond vigilantes” in the 1980s to describe investors who punish reckless fiscal policy by dumping government bonds. But right now, he says that group is nowhere to be seen in America.
Bond market braces for QE pressure from Trump team
Still, there are signs the calm might not last. The 10-year note recently dipped below 4.17%, the first time since May, just as more data hint at slower job growth. With Europe on pause and Japan looking to raise rates, the pressure is building in the U.S. to do something.
Stephen Jen, chief executive at Eurizon SLJ Capital, predicts that:
“The next pressure may be on QE, and if I were in the Trump administration, I would just put pressure on the Fed to consider re-adopting it.”
William Dudley, former New York Fed President, told Bloomberg TV, “The markets are still pretty comfortable about this. Probably a little too comfortable, given the fact of the president trying so hard to influence monetary policy. But how this plays out, there’s a long way to go.”
Pimco’s Michael Cudzil added that the Fed could also start reinvesting maturing mortgage-backed securities as a way to cool off housing markets.
Right now, the Fed is doing the opposite, letting up to $5 billion in Treasuries and $35 billion in mortgage debt mature each month without reinvesting, a policy known as quantitative tightening.
Yardeni warned that any Fed move to buy bonds or change Treasury issuance might only buy time. Unless Congress starts cutting spending or raising taxes, the U.S. may lose the patience of investors. And when that happens, it won’t be a press release, it’ll show up in the market.
“Bond vigilantes are in Europe and Japan,” Yardeni said. “They are out there, just not here. That could change pretty quickly.”
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