Posted 12/15/2023, 12:05:39 PM
Fed's Dovish Shift Sparks Questions and Market Moves as Data Remains Strong
- Dovish shift by Fed has seen Treasury yields and dollar fall sharply, raising questions about whether Fed knows something or rates tightening via inflation fall
- Recent US data remains strong - jobs, inflation - so rate cuts not expected imminently
- Upcoming US data releases likely continued weak housing transactions, partial durable goods orders rebound, inflation measure updates
- UK services inflation expected to remain sticky and elevated near-term before falling back toward 4% target by next summer
- UK markets pricing in 4 rate cuts for 2024 despite BoE pushback; cuts likely once inflation progress allows, perhaps as early as August