February 23, 2024

Rate Debates Push Stocks Higher

Stocks have continued the recovery from the hitherto oversold area. Traders are also gauging renewed calculations that central banks might soft-pedal on their hawkishness. It has become necessary to slow down in order to avoid economic chaos.

Indexes Rally

The S&P 500 rallied again on Tuesday as it prolonged its gains from Monday. This has become the index’s third-best October beginning since 1930. The latest recovery has cut down the stock market losses that rose over 20%.

Treasury bond yields have fallen again on Tuesday. It is reversing the gains it made in the past few weeks when stocks fell.

The Reserve Bank of Australia made a surprise dovish move. The Bank of England also resorted to buying bonds to salvage the British Pound. Those events succeeded in driving conversations about softening central banks’ monetary policies.

Traders in the US have reduced their bets over further interest rate increments. There were weak reports from the manufacturing sector and it generated speculations. It now looks like the Federal Reserve might draw back from tightening for now.

The new perspective, however, elicited lots of skepticism. Market observers feel quite uncomfortable with the view too. 

The Feds Might Push On

Brown Brothers’ Win Thin gave his opinion on the matter. He said that softer reports from real sectors will not obstruct the Feds from raising rates. He also said the Feds will take a recession if it will bring inflation down.

On the crude oil front, prices rose again after their biggest daily gain since May. The market is looking forward to OPEC+ announcing the awaited production cut. 

West Texas Intermediate rallied by over 5% on Monday and added 8% on Tuesday. OPEC+ is expected to cut production by up 1 million barrels/day. It is expected to solve the market clot.

Some major events ahead this week include the release of the Eurozone’s PMI. The OPEC+ meeting is scheduled to start on Wednesday. The US Federal Reserve’s Raphael Bostic is expected to deliver an address also on Wednesday.

New Zealand’s central bank will hold its policy meeting on Wednesday. Then the Eurozone’s retail sales report will be ready on Thursday. The same day will equally see the US initial jobless claims.

A round of Fed speaks will follow the release of the jobless claims on Thursday. A barrage of data will then roll in from the US on Friday. They include the NFP, wholesale inventory, and unemployment reports.

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