The Boost From Easing Market Rules

Global markets are entering a rare period of simultaneous easing across monetary, fiscal, and regulatory policies, a combination typically reserved for severe economic crises. While the Federal Reserve continues to lower interest rates despite persistent inflation and the U.S. government maintains a $1.9 trillion deficit, the easing of regulatory policy serves as a critical third lever for market stimulation. Key developments include the potential release of $5.8 trillion in balance sheet capacity for global systemic banks and the U.S. administration's recent $200 billion mortgage purchase program through Fannie Mae and Freddie Mac. These shifts, alongside $3 trillion in projected AI-related spending through 2028, create an environment where market valuations may overshoot. Consequently, mortgage strategy assessments have shifted from positive to neutral as the impact of these interventions is rapidly reflected in asset prices.