Bonds & Stocks
Wall Street extended its rally after dovish Federal Reserve signals unleashed a bullish pulse across global markets amid optimism the world’s largest economy will be able to avert a recession. Equities climbed around the world — with the S&P 500 moving closer to its all-time high — as the Fed pivoted toward reversing the steepest hikes in a generation after taming inflation without a major economic slowdown. Both retail sales and jobless claims on Thursday reinforced the soft-landing narrative. And Jerome Powell’s lack of against the dovish bets also helped renew the surge in Treasuries, with the 10-year yield below 4%.
Economy
After clashing in recent years, Wall Street traders and the Federal Reserve are – for once – broadly in sync: The great monetary pivot is near as central bankers engineer a once-unthinkable soft landing in the world’s largest economy. That’s the big-picture takeaway after the Fed gave its clearest signal yet that its historic policy tightening campaign is over by projecting more aggressive interest-rate cuts in 2024 – in the process igniting one of the biggest post-meeting rallies in recent memory.
World
The European Central Bank kept interest rates on hold for a second meeting with inflation tumbling, but said it will step up its exit from €1.7 trillion ($1.8 trillion) of pandemic-era stimulus. The deposit rate was left at a record 4% — as predicted by all 59 economists in a Bloomberg survey — with the ECB reiterating that this level will make a “substantial contribution” to returning consumer-price growth to its 2% goal.