{"id":293357,"date":"2020-08-28T04:35:57","date_gmt":"2020-08-27T18:35:57","guid":{"rendered":"https:\/\/www.gomarketingteam.com\/articles\/monetary-policy-will-remain-accommodative-for-longer\/"},"modified":"2021-02-19T12:13:31","modified_gmt":"2021-02-19T01:13:31","slug":"monetary-policy-will-remain-accommodative-for-longer","status":"publish","type":"post","link":"https:\/\/www.gomarkets.com\/en\/weekly-summaries\/monetary-policy-will-remain-accommodative-for-longer\/","title":{"rendered":"Monetary Policy Will Remain Accommodative for Longer"},"content":{"rendered":"

vBy Deepta Bolaky<\/strong>
\n\u00a0@DeeptaGOMarkets<\/a><\/p>\n

Attention was predominantly on the exclusive central bank conference this week as it fosters open discussions about global policy matters. In a pandemic-induced environment supported by ongoing fiscal and monetary policies, this year\u2019s theme <\/span>\u201cNavigating the Decade Ahead: Implications for Monetary Policy\u201d<\/b><\/a> for the symposium was very relevant for investors.<\/span><\/p>\n

Stock Market – New Highs<\/b><\/h4>\n

Global stocks traded mixed at the start of the week as investors await updates from central bankers, policymakers and economists to determine whether the current stimulus will likely stay on hold for some time.\u00a0<\/span><\/p>\n

We saw new highs in the stock market led by vaccine-related news and the outperformance of the technology stocks. On Thursday, in a much-anticipated speech, Jerome Powell stated that the Federal Reserve will remain accommodative and <\/span>\u201cappropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time\u201d.\u00a0 <\/span><\/i>The Federal Reserve also sent a clear message on the labour market – <\/span>\u201cA clear takeaway from these events was the importance of achieving and sustaining a strong job market, particularly for people from low- and moderate-income communities.\u201d<\/span><\/i><\/p>\n

All in all, the moderate inflation strategy has confirmed the expectations of low-interest rates and quantitative easing for even longer. Wall Street extended gains compared to its peers.\u00a0<\/span><\/p>\n

\"\"
\nSource: Bloomberg<\/p>\n

Throughout the week, S&P500 and Nasdaq Composite recorded consecutive new highs. Jerome Powell\u2019s speech helped the S&P 500 to notch even higher while pushing the Dow Jones closer towards positive territory for 2020. The latter is yet to reclaim February highs. <\/span><\/p>\n

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\nSource: Bloomberg<\/p>\n

Another notable event was the reshuffling of the Dow – <\/span>Amgen<\/b> ($AMGN), <\/span>Salesforce.com<\/b> ($CRM) and <\/span>Honeywell International<\/b> ($HON) will be added to the index while <\/span>Pfizer ($PFE)<\/b>, <\/span>Raytheon Technologies ($RTX)<\/b> and <\/span>Exxon Mobil ($XOM)<\/b> will be removed. The moves were spurred by Apple\u2019s decision to split its stock which will reduce the Information Technology index weight.<\/span><\/p>\n

Salesforce\u2019s share price rose by more than 30% following the announcement and is currently trading at $276.34. <\/span><\/p>\n

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\nSource: Bloomberg<\/p>\n

Forex Market<\/b><\/p>\n

In the forex market, major currencies were stronger against the greenback. Major pairs continued to trade within familiar ranges ahead of the Jackson Hole Symposium. Jerome Powell\u2019s speech triggered wild swings in the forex market.\u00a0<\/span><\/p>\n

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\nSource: Bloomberg Terminal<\/p>\n

The US dollar index which tracks the performance of the greenback against a basket of currencies fell to a low of 92.40 before climbing higher. The Antipodeans and commodity-linked currencies remained among the best performers.\u00a0<\/span><\/p>\n

\"\"
\nSource: Bloomberg Terminal<\/p>\n

Furthermore, on the economic front, the Global Economic Surprise Index by Citigroup shows that global economic data is beating analyst expectations like never before. <\/span><\/p>\n

\"\"
\nSource: Bloomberg Terminal<\/p>\n

United States:\u00a0<\/b><\/p>\n