- After the Federal Reserve validated predictions that it will soon adopt a more lenient stance and drove stock market gauges to all-time highs, stocks continued to rise.
- While the underlying gauge was on track for its seventh straight weekly rise, S&P 500 futures edged higher by 0.3%. In Europe, the Stoxx 600 index reached its highest point since January 2022 and was headed for a fifth week of gains.
- US equity funds recorded a ninth week of inflows, taking in $25.9 billion, the longest streak since December 2021, according to a Bank of America note citing EPFR Global data. The Fed sparked a speculative frenzy this week when it affirmed speculation it is ready to declare victory on inflation and shift to rate cuts without a significant cost to the economy.
- With a staggering $3.1 trillion in notional open interest scheduled to either expire or be rolled into the new year, traders will still have to deal with the largest quarterly options and futures expiry Friday of the year, which could cause volatility, as the week comes to an end, according to Tier1Alpha strategists.
- Some of the excitement was subdued by a warning from Europe's central bankers that they are not prepared to follow the Fed's policy pivot. Member of the Governing Council of the European Central Bank Muller stated on Friday that markets are overestimating their likelihood that the ECB will begin reducing interest rates in the first half of next year. ECB President Lagarde stated yesterday that the bank had not discussed rate cuts at all.
