Last week, the Fed began buying US Treasury bonds, de jure acknowledging what had been happening de facto over the past few months via the repo mechanism: the money printer is back on. For now, the Fed is moving cautiously, announcing monthly purchases of Treasury bills (T-Bills - short-term, up to 1 year) totaling 40 billion USD. But this is only the beginning. Asset purchases by the Fed will accelerate throughout next year, with the focus shifting toward longer-dated paper.
Next week marks the start of the period better known as the Santa Claus Rally. It covers the last 5 trading days of December and the first 2 days of January. The window is short, but its reputation is almost fairy-tale-like.
Since 1929, the S&P 500 has risen during this period 79% of the time, with an average gain of +1.6%. The last two weeks of December remain the strongest stretch for equities over the past 75 years. This seasonality isn’t decorative - it’s statistically proven.... Show More
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