Global markets rallied on Monday, buoyed by growing optimism that the record-long United States government shutdown could soon come to an end. Investors welcomed signs of progress in Washington as the Senate advanced a measure to reopen federal agencies after 41 days of paralysis that had disrupted economic data releases, delayed aid programs, and impacted travel. The renewed confidence pushed equity benchmarks higher, lifted Treasury yields, and weakened the dollar slightly against major currencies. Analysts described the move as a relief rally driven by expectations that the political impasse would be resolved in the coming days, restoring confidence in US economic stability.
The S&P 500 and Nasdaq Composite each climbed more than 1% in early afternoon trading, while the Dow Jones Industrial Average added roughly 0.3%. The MSCI global equity index also rose 1.08%, supported by strong gains in European and Asian markets. Investors said the prospect of resumed government operations could help lift sentiment heading into the final quarter of 2025. “There’s an increased willingness to take on additional risk because there’s a possibility the government could reopen some time this week,” said Robert Pavlik, senior portfolio manager at Dakota Wealth. Market participants, he added, have been waiting for concrete data to confirm the health of the economy after weeks of speculation.
Bond markets reflected similar optimism. The yield on the benchmark 10-year US Treasury note rose to 4.11%, while the two-year yield climbed to 3.59%, as investors moved away from safe assets. Gold also advanced 2.4% to $4,095 an ounce, driven by softer inflation expectations and a weaker dollar. Meanwhile, oil prices edged higher, with Brent crude reaching $63.71 a barrel as traders weighed potential demand recovery against ongoing oversupply concerns.
The Federal Reserve remains a key focus for markets. While Fed Governor Stephen supported a 50-basis-point cut in December, other policymakers such as St. Louis Fed President Alberto Musalem called for caution, noting that inflation remains above the central bank’s 2% target. Traders currently see a roughly 63% chance of a smaller rate cut next month.
In currency markets, risk-sensitive assets outperformed. The Australian dollar rose 0.55% to $0.6527, benefiting from the improved global outlook, while the Japanese yen weakened as investors rotated toward higher-yielding positions. Analysts said that a successful resolution of the shutdown could reignite momentum in both equities and commodities, as well as restore confidence in the broader USD outlook.
