Another reason for market pep: A global central bank easing cycle is starting

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Stock Markets,Prices,Citi Trends Inc

Central banks around the world are easing at the quickest past in roughly 20 years. All eyes now turn to the Federal Reserve and its September policy meeting.

There's another reason why Wall Street had such a big day on Thursday besides some solid economic data. Investors are realizing we are in the middle of a massive, synchronized global central bank easing cycle and the Federal Reserve is about to join the party. In the past, such massive monetary easing has given a boost to equities, especially when they are not occurring during recessions.

Investors also cheered a fall in jobless claims on the week, with both reports serving as a much desired slate of favorable economic data following a weak nonfarm payrolls report earlier in August that helped sparked a sell-off. With the Fed set to cut rates next month, the market is anticipating it will get friendlier monetary policy, while keeping a strong economy.

 

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