Promise of Low Rates Continues to Support Risk Appetite
Wall Street is eyeing more records when the bell rings on Monday, with all three major index futures up around a quarter of one percent as the open approaches.
Jerome Powell’s soothing tones are continuing to provide that calming reassurance for investors, even as we head into what could be a rollercoaster ride in the final months of the year. Investors as ever are optimistic.
A vaccine is on the way and perhaps Biden wouldn’t be such a bad thing for the markets afterall. A multi-trillion dollar US stimulus package is just the icing on the cake.
I mean, none of these things are guaranteed by any stretch of the imagination and the most important of them is far from it. For those that harbour any lingering doubts, the Fed has your back. A small tweak to the monetary policy framework last week means, in theory at least, that rates should remain lower for longer.
Not that they were rising any time soon anyway. It may not be clear from looking at equity markets but we are in the middle of a global pandemic and the US unemployment rate is in double digits, for at least four more days anyway.
Current forecasts suggest it has fallen to 9.9% in August, all the more reason for Congress to get this relief package sewn up asap. The economic recovery may start to look very different if they don’t.
The first week of the month as ever is littered with data, none more important than the jobs report on Friday. We’re now just over two months from the US election and with Trump pinning his hopes on being the right person to get the economy booming again, a few knockout jobs reports won’t do him any harm. And looking at the polls, he needs any help he can get.
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