Central Banks in Focus: China and Japan Stand Pat as Markets Digest Fed Cut
After a strong Thursday fueled by Federal Reserve easing, global markets take a breather with attention turning to central bank decisions in Japan and China.
China’s surprise decision to keep lending rates unchanged confounds expectations, pushing the yuan to a 16-month high. Meanwhile, the Bank of Japan holds steady on policy settings, boosting the yen back to near 144 per dollar.
In Europe, the Bank of England refrains from cutting rates amidst mixed economic signals, lifting sterling to its highest levels since March 2022.
Wall Street remains optimistic, with all major stock indexes surging to new highs on the back of the Fed cut and positive jobless data. Tech-heavy Nasdaq and small cap indexes hit their best levels since July, while the S&P500 and Nasdaq are up 20% year-to-date.
Looking ahead, Fed futures suggest more easing over the next year, with 200bps of cuts expected. U.S. Treasuries are comfortable with this outlook, while inflation remains in line with the Fed’s 2% target.
Amidst geopolitical tensions and central bank focus, stock futures ease slightly from record highs ahead of Friday’s trading session.
Key events to watch for later in the day include Eurozone consumer confidence data and speeches from central bank officials.