Soothing Fed Sends Global Stocks, US Futures, Commodities Higher

Optimism has returned to markets post the BOJ and FOMC.
Following the Fed’s “hawkish hold” and the BOJ’s “confused contradiction”, global risk (and non-risk) assets got the green light, and as a result stocks and bonds rallied in Asia and Europe, with US equity futures rising another 0.4%, advancing with oil and industrial metals, as iron surged in Chinese trading.
“The looser for longer message from the Fed and the lowering of the median point of rate rise projections is seen as a plus for risk assets as can been seen in global equities,” said fund manager GAM’s head of multi-asset portfolios, Larry Hatheway.
Looking back at the Fed’s decision, Yellen signalled she could hike rates by year-end as the labor market improved further, but cut the number of rate increases expected in 2017 and 2018. Yellen also reduced its longer-run interest rate forecast to 2.9 percent from 3 percent. Richard Franulovich, an analyst at Westpac, noted that back in June the median ‘dot plot’ showed five hikes to end-2017. Now it is down to just three.
“We do not feel that the dollar has the wherewithal to make a more concerted run higher in the next few weeks,” he added. “The FOMC is unlikely to deliver anything more than a very ‘dovish’ December hike.”

This post was published at Zero Hedge on Sep 22, 2016.