Global Markets Rally on Bets of Aggressive 2023 Rate Cuts Despite Central Bank Warnings
• Global financial conditions loosest since August, signaling economic risks if central banks don't cut rates as expected • Markets have priced in heavy interest rate cuts in 2023, undoing some recent tightening and encouraging speculative rallies • Stocks worldwide near multi-month or multi-year highs fueled by expected rate cuts next year • Fed projected 75 bp rate cut in 2023; markets now price in around 150 bp, despite Fed signaling further hikes • Investors struggle to see central banks cutting rates as much as markets expect; chasing rally difficult at current levels