Risks To The Rate Cut Thesis
One of the big themes we’ve discussed for the last four months has been the Fed cutting rates in 2024. However, there’s been a major disconnect between the market’s expectations and the Fed’s guidance since November. That disconnect made today’s Fed decision and commentary tricky for the market to digest. Let’s talk about why. 🤔
First off, going into this year, the Fed fund futures market was anticipating six rate cuts during 2024. Meanwhile, the Fed’s guidance in December suggested the central bank was estimating just three cuts during the year, as it believes there are still upside risks to inflation.