Over the past month, the S&P 500 has experienced a 4% rally, coinciding with a significant shift in market expectations for Federal Reserve policy in 2024. Market participants have revised their expectations, now anticipating only three rate cuts in 2024, down from six. This recalibration of expectations is reflected in the pricing of Fed swaps, which now only anticipate 75 basis points of easing in 2024. Additionally, the sentiment around the possibility of rate cuts in the near term has cooled, with JayWoods3 from CNBC stating there's less than a 5% chance of a cut in March and about a 25% chance in May. This shift in sentiment could potentially re-energize the rate cut narrative as the next Federal Open Market Committee (FOMC) meeting approaches. Moreover, the latest interest rate decision in Israel was reported at 4.5%, aligning with the previous rate but exceeding expectations of 4.38%.
ICYMI *FED SWAPS PRICE IN ONLY 75 BASIS POINTS OF EASING IN 2024
Interest rate cut expectations continue to scale back: Markets now see a ~38% chance of 4 interest rate cuts in 2024. Just over a month ago, the base case showed a 50%+ chance of 6 interest rate cuts in 2024. Meanwhile, odds of a March rate cut are down to 3% and odds of a May… https://t.co/Y9W3e2slTF
Market has almost a 0% probability of a March cut now...remember when it was 90%!? Fed swaps are pricing only 75 bps of cuts now for all of 2024... https://t.co/3C8lJAVFhL
Fed Swaps Briefly Price Only 75 Basis Points of Easing in 2024 https://t.co/sUgLpFxm2S
*FED SWAPS PRICE IN ONLY 75 BASIS POINTS OF EASING IN 2024
🔴 FED SWAPS PRICE IN ONLY 75 BASIS POINTS OF EASING IN 2024.
🇮🇱 Interest Rate Decision Actual: 4.5% Expected: 4.38% Previous: 4.5% https://t.co/kpe61YAYeK
The S&P 500 has rallied 4% over the past month, while traders have slashed the # of rate cuts expected in 2024 to three from six
Latest on #Fed rate cut possibilities. @JayWoods3: "Currently sentiment is less than a 5% chance of a cut in March & roughly a 25% chance on a rate cut in May. However, if this number continues to cool it could re-energize the rate cut narrative heading into... FOMC mtg. @CNBC