(Bloomberg) — US stocks ended a shortened trading session higher while Treasury yields declined across the curve. Speculation that President-elect Donald Trump will temper his most extreme trade policies drove the dollar down.

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The S&P 500 climbed more than 1% for a second straight week. On Friday, it rose 0.6%, notching fresh record highs. The 10-year Treasury yield fell to 4.17%. The Bloomberg Dollar Spot Index extended a weekly decline to more than 1%, snapping eight weeks of gains.

Trump’s pick for his Treasury secretary has fueled optimism that tariffs will be measured, boosting US stocks and bonds, and sapping dollar strength. The S&P 500 rose 5.7% in November, its best month this year, as investors plowed $141 billion into US equities, the heaviest inflows for a four-week period on record, according to EPFR Global data. A handful of tech titans have led 26% year-to-date gains in US stocks on the prospect of Federal Reserve rate cuts while the American economy continues to grow.

“We were talking day in and day out about trade tensions in 2019. What happened? The Nasdaq was on a tear. What mattered was the Fed was making a U-turn, real rates went down, and that drove equities,” Max Kettner, multi-asset chief strategist at HSBC Holdings Plc, said in an interview with Bloomberg TV. “That’s very similar to now — this is still a cutting cycle. It’s a fantastic set-up.”

There is now an “extreme disconnect” between investor bullishness on US assets and bearishness on the rest of the world, according to Bank of America Corp. strategists, who made a contrarian bet on European stocks as the continent’s main equity index heads for its worst year of underperformance relative to the US since 1976.

Scope for fiscal spending appears to be improving in Europe, while any potential ceasefire in Ukraine could ease pressure from high energy prices, according to the strategists.

Euro-area inflation climbed above the European Central Bank’s 2% target, but by a margin that was seen as too small to derail the path of policymakers to lower rates. Traders on Friday raised their ECB rate-cut bets, seeing a 20% chance of a half-percentage point reduction in December.

Elsewhere, the yen advanced more than 3% against the dollar this week, as bets grow that the Bank of Japan will raise interest rates next month.

In Canada, the economy posted a modest gain last month after a weaker-than-expected third quarter, putting the central bank on track to keep cutting rates.

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