Financial markets responded aggressively to the Federal Reserve’s dovish signals at the December FOMC meeting when their individual dot plots pointed to three rate cuts in 2024. This gave market participants the confidence to ramp up the pricing of potentially even more aggressive easing coming through, helped additionally by a very soft core PCE deflator print. Markets are now anticipating six 25bp moves, starting as soon as March. We have been predicting 150bp of interest rate cuts in 2024 for some time, but we remain a little nervous that the market has moved so far so quickly even though the jobs market remains ... (full story)