Riskier assets (click title to entry - thank you) hit a post-crisis high last week in the wake of tepid growth figures signaling still-loose monetary policy. A combination of low interest rates and steady but unspectacular growth proved a perfect mix to feed the risk appetite of investors.
Chairman of the US Federal Reserve, Ben Bernanke, gave his first press conference on Wednesday and emphasised that, while the $600 billion quantitative easing programme would end as stated in June, the Fed saw enough weakness in the US economy to suggest that price pressures were “transitory”, and the Fed would not be reducing the size of its enormous balance sheet. This pushed US stocks to their highest level since June 2008, a few months before the collapse of Lehman Brothers. It also propelled commodities, especially precious metals.
In the currency markets, the US dollar continued its decline last week hitting a three-year low after the Fed confirmed market suspicions that it would not be ready to tighten monetary policy for some time.
