From the US, to Europe and Asia the markets are sending signals that the era of cheap money is not even near . .
Bonds in the European Union had their best day since Brexit, commodities jumped for a sixth straight day as oil topped $46 a barrel.Traders piled into equities, bonds and commodities after the Federal Reserve reined in its outlook for future interest-rate increases, soothing concern that central banks globally would taper stimulus efforts. Attempts by major central banks to boost growth with looser policy have propelled stocks since the global financial crisis, and government bond yields have fallen to record lows. Hours before the Fed scaled back its tightening plans Wednesday, Japan tweaked its stimulus program, fueling bets that Europe will keep its easing stance.
It happened—again. Stocks rallied to records and government bond prices jumped, pushing yields toward the lows. Much like the bond bulls, gold bugs don’t seem too worried abut the Fed. The precious yellow metal, which prospers in times of low interest rates and general market distress, zoomed higher in Thursday trade. The trading action implies that few investors are wagering that a hike is likely soon. The market is pricing in the prospect of a rate increase at the Fed’s next policy meeting on Nov. Meanwhile, Futures on Asian indexes signaled gains, with markets in Japan to resume Friday after missing out on the post-Fed risk rally. Contracts on the Nikkei 225 Stock Average traded in Chicago jumped 1.6%, while futures on equity benchmarks in Australia, South Korea, Hong Kong and China climbed at least 0.3%.
The Nasdaq Comp. Index COMP, +0.84% logging a second-straight record close Thursday and shares of Amazon Inc. hit its own record high after the Federal Reserve surprised no one Wednesday by holding off on hiking benchmark interest rates for at least another few months..
The Dow Jones Industrial Average add 0.54% second straight day .. and the S&P 500 index add 0.65%
Central bankers, namely the Fed and the Bank of Japan, are primarily responsible for the uncharacteristic market trading action. Bonds, typically viewed as haven assets, tend to lure bidders when stocks are retreating, not when they are making another assault into the stratosphere. Some have referred to the move as a relief rally. Equity investors, who have enjoyed ultra-low rates for a protracted period, are cheering the Fed’s inaction because it offers equities more room to run higher. Treasury investors see the delay as an opportunity to scoop up more government bonds..
J. Mason ♦