While the term "transitory" has fallen out of favor with the Fed, the word "recalibrate" is now in vogue. Chair Jerome Powell
used the expression a total of 10x during his post-meeting press conference on Wednesday
, and the markets are just loving it. Some time was needed to digest the new phrase, but it seems that it'll be one to add to the central bank lexicon going forward.
Translation: The Fed's past policy stance is being recalibrated to "lower for longer" to support the labor market and economic growth. As long as inflation doesn't resurface, the easing cycle should continue
through 2026 and beyond. The accommodative stance is unleashing some animal spirits, with bullish forces igniting hopes of a soft landing, healthy corporate profits and resurgent growth.
Risk assets responded in kind on Thursday, and
then some. The Dow Jones Industrial Average hit 42,000 for the first time in its history, the S&P 500 scored its 39th record close of the year, and the YTD gains for the Nasdaq Composite also returned to 20%, fueled by a rally in tech. Economic data on the labor market further boosted sentiment, with the number of Americans filing for initial jobless claims falling to its
lowest level since May.
SA commentary: "In my view, this is great for markets,"
said Victor Dergunov, Investing Group Leader of
The Financial Prophet. "It states that the Fed is serious about supporting the market. In a sense, the Fed put is back, which is excellent for high-quality stocks and other risk assets advancing from here. However, we must avoid a significant reversal. Also, it's crucial that the market focuses on the positives and doesn't panic because the Fed brought the bazooka out." (
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