Markets Overestimate Fed Rate Cuts for 2024, Says BlackRock
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Markets are pricing in at least 100 basis points of Fed interest rate cuts in 2024, starting in Q2. BlackRock thinks those bets are "overdone."
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BlackRock expects the Fed to cut rates in H2 2024, but by less than markets are pricing in. The cuts would likely be under 100 basis points.
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The Fed will need to limit rate cuts to stop further inflationary pressure, as economic growth has exceeded expectations.
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Market volatility in 2024 is likely, particularly in bonds, as the Fed's path is unpredictable after the pandemic.
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BlackRock declined to predict recession or soft landing, but said 2024 will see persistently higher rates and tighter financial conditions.