Markets Bet on Faster Pivot to Rate Cuts as Inflation Cools Faster Than Expected
• Markets now predict over 100 basis points of rate cuts in 2023 from the Fed and ECB, shifting expected timing to first half of 2024
• Euro zone inflation dropped more than expected in November, challenging ECB's view of persistent inflation
• Declines in Treasury yields and easing financial conditions may force central banks to shift closer to market expectations
• Comments from Fed's Waller and others show some policymakers willing to talk about 2024 rate cuts
• Analysts predict central banks may "pivot quicker than people think" if inflation keeps falling rapidly