The Federal Reserve gave financial markets what was expected by lowering the target rate for the Fed Funds by 25 basis points. The Fed called the rate cut a mid-cycle adjustment and not the beginning of a new easing cycle. The markets read this as two cuts and done or maybe even one and done.
It has been an extremely bullish year in many financial categories. Today’s rising prices on government bonds may be saying something about the outlook for future nominal growth. Equity-related assets may be relying on policy to save their valuations. Precious metals could see currency devaluation ahead. The one thing they all appear to be counting on is more monetary stimulus.
Most of the major equity markets ended the first calendar quarter of the year with double digit percentage gains. Much of last year’s losses have been put in the past. What’s more, popularly followed indexes are closing in on last year’s all-time highs. Those that abandoned stocks at the end of 2018 have surely missed out on a fast, yet sizeable market rebound.