U.S. and global stock markets pushed to fresh record highs on Monday as traders positioned for what many expect will be the beginning of a U.S. Federal Reserve easing cycle this week. The S&P 500 and Nasdaq Composite closed at new peaks as a softer U.S. dollar and falling bond yields supported risk assets, while gold also reached a record high amid the shift in policy expectations.

The benchmark U.S. 10-year Treasury yield eased 2.4 basis points to 4.036%, reflecting a modest move lower in longer-term rates that helped lift equities. Currency markets showed a notable dollar retreat, broadly boosting the euro and other major currencies. Futures markets implied roughly 125 basis points of Fed rate cuts by late 2026, a level market participants say leaves little room for disappointment.

All eyes are now on the Fed's rate projections — the so-called "dot plot" — and on Chair Jerome Powell's announcement and press conference. Those signals will be parsed for the extent and pace of any future easing, which could reshape capital flows across stocks, bonds and currencies. “Anything less than dovish will likely disappoint investors,” traders said, underscoring the sensitivity of markets that have already priced in substantial easing.

The expected pivot in U.S. monetary policy comes after a multi-year tightening cycle that pushed policy rates to post-2000 highs and lifted borrowing costs across households and businesses. A turn toward easing would mark a significant policy shift with implications for growth, inflation expectations and asset valuations. Strategists caution that while lower policy rates can prop up equities and reduce debt-servicing costs, they also risk reigniting inflation pressures if growth outpaces productivity gains.

Outside the United States, market pricing diverged. Investors saw room for rate cuts from the Bank of Canada, while expectations were for steadier stances from the Bank of England and the Bank of Japan in the near term. That patchwork of central bank timing has supported cross-asset repositioning, influencing currency moves and differential bond yields.

The price action on Monday reflected both optimism and a degree of fragility. Equity gains were broad-based, but the market’s heavy reliance on anticipated Fed easing raises the risk of abrupt reversals if the Fed signals anything less than a clear pivot. Fixed-income traders noted that a stepback from dovish language could push the 10-year yield sharply higher, compressing equity multiples and trimming the rally.

For investors, the short-term calculus is straightforward: markets are buying a cycle of lower rates, but they are pricing in a large amount of easing already. For policymakers, the calculus is thornier. The Fed must balance a desire to support growth against the risk of undermining hard-won disinflation. Powell’s remarks and the dot plot will therefore matter not only for markets on Tuesday but for the trajectory of global financial conditions for quarters to come.