Conviction that central bank rate hikes are over spurred a massive increase in risk appetite last week, fuelling the strongest stock market rally since 2020.
The Dow Jones Industrial index surged past the key 30,000-point level, while more significantly, the broad-based S&P 500 index rose to its highest levels since March 2022 and appears on target for new all-time highs at 5,000 points within months.
Investors appear to be calling the bluff of US Federal Reserve chairman Jerome Powell, who remarked on Dec 1 that it is "premature to conclude with confidence" that monetary policy is "sufficiently restrictive", suggesting the Fed was not done yet with rate hikes.
Instead, markets took heart from the utterances of one of Mr Powell's most hawkish Fed colleagues, Mr Christopher Waller.
Mr Waller, a Fed board member, who had previously been one of the strongest proponents of aggressive rate hikes to bring inflation under control, told the American Enterprise Institute on Nov 28 that disinflation was now kicking in, and hinted that the terminal Fed rate (the highest desired interest rate to control inflation) had been achieved.
"I am increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2 per cent," Mr Waller said. "There's just no reason to say you would keep rates really high and inflation is back at target." The yield on the closely watched 10-year Treasury note fell more than 13 basis points to 4.213 per cent, while the "risk-on" switch towards stocks was evident as the CBOE Volatility Index or VIX (also known as the fear index) fell to its lowest levels since 2019.
With spending, inflation and labour market data cooling, the three major Wall Street stock indexes continued their November rally into the first day of December.
هذه القصة مأخوذة من طبعة December 04, 2023 من The Straits Times.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك ? تسجيل الدخول
هذه القصة مأخوذة من طبعة December 04, 2023 من The Straits Times.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك? تسجيل الدخول
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