Markets Bet on Fed Rate Cuts Despite Inflation Concerns While BOJ Prepares to Hike Rates
• Markets expect 80-90 basis points of Fed rate cuts in 2023 despite recent inflation figures giving reason for caution about early cuts
• NFIB Small Business Optimism Index dipped slightly, indicating potentially softening labor market conditions
• Traders believe in a "Fed Put" - that the Fed will cut rates without concern of reigniting inflation
• Bank of Japan is expected to hike rates soon, exiting negative rate policy as economy recovers gradually
• Japanese yen selling indicates expectations of stronger yen given Fed rate cut forecasts and potential for BoJ hikes