"There is something profoundly depressing about the market's obsession with US monetary policy," says Jonathan Allum in The Blah! newsletter. Nave souls might have thought that Federal Reserve chairman Jerome Powell's decision to "accentuate the negative" while giving testimony to Congress last week would spook markets.
Far from it. That's because his gloomy remarks about trade tensions and the global economy have left it a virtual certainty that the Federal Reserve will cut interest rates at the end of this month, and liquidity-addicted markets love easier money. The news sent America's S&P 500 soaring above the 3,000 mark for the first time ever. The index is now up 20% so far this year. The Dow Jones Industrial Average index also breached 27,000.
This may herald the start of a new cycle of interest-rate cuts. Interest-rate futures show that traders think the Federal Reserve "could unravel all of last year's four rate increases by 2020", says Robin Wigglesworth in the Financial Times. If it fails to serve up the anticipated easing, many "will feel entitled to sue the central bank for breach of contract", says John Authers on Bloomberg.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Taking out insurance
Markets appear to have "browbeaten the central bank into a defensive posture", Richard Barwell of BNP Paribas Asset Manager told the paper. Trump's "barrages of tweet attacks" and repeated threats to fire Powell have also added to the pressure to ease policy and drive down the dollar, adds Irwin Stelzer in The Sunday Times. The complaints of politicians and markets seem to have prompted an overreaction. The Fed has never before made such a "pre-emptive move to stave off a slowdown while the economy's performance has been so close to its expectations", economist Joe Carson tells Barron's. The Federal Reserve once saw its job as being to take away "the punch bowl when the party gets going", says Forsyth. Now it prefers to spike the bowl at the first sign that the party is slowing down.
Forever blowing bubbles
Lloyds, Halifax and Bank of Scotland to shut another 45 branches
Lloyds Banking Group, which includes Halifax and Bank of Scotland, is set to close a further 45 branches in 2024 - find out if a branch near you is closing.
By Vaishali Varu Published
US stock trading app Robinhood launches in the UK
The low-cost trading platform has opened another waiting list for British investors - following two failed attempts to launch in this country - and is hoping to be fully operational next year.
By Ruth Emery Published