It's all gone a bit Gordon Gekko.
Key points
- The Fed left rates unchanged, but the commentary revealed the dovish preference of the FOMC.
- It was a big week in Japan as the BoJ called an end to the era of Negative Interest Rates and Yield Curve Control.
- New record highs in Japan stocks are highlighting a change in psychology and behaviour now underway in the country.
- With central banks globally either cutting rates or tilting that way, the macro narrative is one in which policymakers are feeding the market's greed.
This week's Fed meeting offered little new information to investors, with yields hardly changed. However, the fact that the FOMC revised estimates for growth and inflation slightly higher in 2024 – although continue to signal three rate cuts over the coming nine months – was seen as revealing a dovish preference on the part of Powell and colleagues.
In this sense, it might appear that the Fed would like to start lowering interest rates in June. The problem remains though that economic data are not showing many signs of slowing, and recent price data have disappointed on the upside. In that case, we continue to see rate cuts only coming in the second half of the year, with the Fed needing to remain patient in the interim.
