Markets Rise on Rate-Cut Bets as Policy Signals Diverge
Key Takeaways
Global markets opened the week on a cautiously upbeat note as investors priced in easing cycles across major economies, even while central bank messaging remained mixed. In New Zealand, NZIER’s Shadow Board leaned toward a 25bp trim to 2.25% at the November Monetary Policy Statement, citing spare capacity and a still-recovering economy. A smaller bloc urged a pause to avoid reigniting inflation, underscoring the delicate balance policymakers face. US equity index futures opened higher, reflecting hopes for looser financial conditions despite lingering volatility.
In the United States, rate expectations are fluid. Boston Fed President Susan Collins signaled she remains undecided about supporting another cut at the next meeting, a reminder that the Federal Reserve is proceeding data by data. Meanwhile, Goldman Sachs projects a gradual path of reductions beginning in December and extending through mid-2026, which would bring the fed funds rate toward 3–3.25% as inflation cools and the labor market softens. Even with rate-cut optimism, equity sentiment is nuanced: the S&P 500 is down about 3.5% month to date, and elevated AI stock valuations continue to face heightened scrutiny.
Europe’s inflation picture remains subdued. Swiss National Bank President Thomas Jordan’s successor, Martin Schlegel, indicated price growth may edge up slightly but stay near the lower bound of the SNB’s 0–2% target, keeping the zero-rate stance broadly expansionary and setting a high bar for any return to negative rates. Away from central banks, housing affordability remains a pressure point: with the average first-time buyer approaching 40, millennials are redefining the path to homeownership, reshaping demand dynamics across key housing markets.
Key Points – NZIER Shadow Board favors a 25bp cut to 2.25% at the November MPS; minority advocates holding to curb inflation risks. – US equity futures opened the week higher as investors priced in rate-cut prospects. – Boston Fed’s Susan Collins remains noncommittal on another near-term rate cut. – Goldman Sachs forecasts a gradual Fed easing path starting in December, targeting a 3–3.25% funds rate by mid-2026. – S&P 500 is down roughly 3.5% month to date, with AI stock valuations under scrutiny. – SNB expects inflation to rise slightly but stay near the low end of its 0–2% target; policy remains expansionary.
