Besides some solid economic data, there’s another reason Thursday’s performance on Wall Street was so important. Investors realize that we are in the midst of a massive, synchronized easing cycle by central banks around the world, and that the Federal Reserve is about to join them. Monetary easing of this magnitude has boosted stocks in the past, especially when it wasn’t done during recessions. Momentum for rate cuts has begun to build around the world in recent weeks, with central banks including the Bank of Canada and Mexico’s central bank cutting rates significantly, said Nathan Sheets, Citigroup’s global chief economist. In a note to clients, Sheets noted that the past few months, excluding periods of deep recession, have seen the most easing by 33 major central banks in two decades. “We believe central banks are just getting started and the global easing cycle will broaden and accelerate in the coming months,” Sheets wrote on Thursday. Stocks continued their gains on Thursday after better-than-expected retail sales data extended gains in recent days. The S&P 500 rose for a sixth consecutive session, rising about 8% from its August 5 low. favorable economic data. With the Federal Reserve cutting interest rates next month, the market expects the Fed to adopt more friendly monetary policies while keeping the economy strong. RJ O’Brien and deputy managing director Tom Fitzpatrick said that what is certain is that the full benefit to investors from global interest rate cuts will depend on how far behind the curve the Fed is. He said that historically, the Fed needs to catch up. Additionally, with the recent rally, the S&P 500 is up 16% year to date and is near all-time highs. “Overall, both sides are overly favored in terms of easing and tightening, but time will be a better judge of that,” Fitzpatrick told CNBC. “As we sit here today, it’s hard for me to accept that Some tailwinds from central banks. “Futures pricing data shows traders see a 25 basis point chance that policymakers will take action at the Federal Open Market Committee meeting on September 17-18,” according to CME Group’s trade-based calculations. More than 75%. “The monetary policy trend from global central banks did become dovish late last year/early this year,” said Sean Osborne, chief FX strategist at Scotiabank. “The Fed is lagging behind the global easing cycle (as inflation in North America has been trickier). ) and need to catch up at some point.”
