Will the Dovish Pivot Stick?

The shift in expectations for future interest rates has become the top narrative of markets. Following last week’s FOMC meeting, markets were thrilled to see the Fed add rate cuts to their Dot plot (SEP Projections) and talk about the potential for rate cuts....

December FOMC Update

As expected, the Fed left its target rate unchanged at 5.25% – 5.50%, matching market consensus.  The updated rate forecast, or dot plot, doesn’t have another rate hike penciled in next year.   Source: Bianco/Fed as of 12.14.2023   In addition, expectations...

Update on Rate Cut Expectations

Fed expectations moved drastically last week. On Friday, November 24, markets were pricing in three cuts in 2024, with the first in June (orange). By Friday, December 1, the market was pricing in five cuts in 2024, starting around April (blue).   Source: Bianco...

QT Still On But Conditions Have Eased

Last week, the CPI & PPI print both came in weaker than expected. The market responded favorably with stocks up and yields dropping. The bigger change in our minds was the drop in forward interest rate expectations where the market continues to price a lower...

Bond Bounce: Sustainable?

Last week brought a substantial rally in bonds following a brutal three-month span of higher rates. There are a couple of reasons we can point to for the move lower in rates: The US Treasury cut back slightly on the amount of long-term bonds it’s planning to auction,...

FOMC Pause, For Now

As broadly expected, the Fed left their target Fed Funds rate unchanged at the 5.25% to 5.50% range. The pause from July to November marks the longest period without an increase since the liftoff in March of 2022. Powell did leave the door open for further tightening,...