ACTV - The Bull Plateau Swayed By The Market Conundrum Amid Fed's Rate Cuts

2024-03-25 23:27:42 ET

Summary

• The Fed's rate cuts and new monetary policy have influenced the S&P 500 Index and investor sentiment.
• The Fed's extended policy tools include long-term POMOs in addition to short-term OMOs.
• The market reflects expectations of lower interest rates, but the Fed may still maintain a restrictive stance.

The Fed's Rate Cuts and the New Monetary Policy

The March data of the S&P 500 Index has been somewhat grossly influenced by the decision of the Federal Reserve [Fed] on Wednesday (Mar 20). While the benchmark Fed funds rate stood pat, as expected, investors reacted to be emboldened, following 3 rate cuts in the Fed's updated dot-plot, and the favorable remark of the Fed Chair Jerome Powell at his press conference.

The extended policy tools of the Fed, adding the long-term (i.e., one decade or so) POMOs (Permanent Open Market Operations) in addition to the traditional very short-term (i.e., overnight) OMOs (Open Market Operations)....

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