Macro Insights Weekly - Rate cuts? Not so fast

8 January 2024


  • 2023 ended with global markets in euphoria over ikely near-term rate cuts in the US, with both the fixed income and equity markets rallying. We think the market is getting ahead of itself.
  • Granted, without Fed easing, real short-term rates would rise in 1H24 as inflation eases further.
  • But long-term real rates are already at a 5-month low, thanks to recent market rally.
  • Equity markets have rallied robustly, adding up to an overall easing of financial conditions.
  • Meanwhile, real economic activities and hiring data remain strong. 
  • Given this dynamic, we think Fed officials would wait till mid-year before easing.