The Saturday Hark Back - 02 Dec 2023
Capturing the themes of the week when there’s more time to digest them.
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The Hark Back
The key narratives that drove markets last week:
Last week we saw an acceleration of cuts priced into 2024, with odds of ECB trimming rates just about pipping the Fed (despite diverging economic performance and varying starting points). No longer is the mkt debating if the Fed will cut in 2024, it is now when will they cut and how many insurance cuts will they need.
This sets up a very interesting SEP dot plot for the Fed members on Dec 13, will they drop or roll the last hike that they had previously forecast in September, will they mark to market their dots down towards 2024 pricing or will they remain resolute with their higher for longer stance.
Bloomberg - Fed Chair Powell Pushes Back on Interest Rate-Cut Bets for First Half of 2024
Reuters - Market pushback on central banks' rates view just got louder
Bloomberg - Traders See as Much as 250 Basis Points of US Rate Cuts in 2024