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Investors have long been playing the bet that the Fed will opt to lean on the side of policy accommodation. But in recent months, this bet has been a tougher one to play, and in recent weeks, things have only intensified, with rate cut expectations significantly scaled back. read report
The run of Dollar demand has resulted in fresh yearly highs against many currencies. We had already seen a wave of Dollar demand on the back of a repricing of Fed rate expectations, and in recent days, geopolitical factors have played into even more Dollar demand. read report
On Thursday, we highlighted the fact that investors are desperate to use anything to justify the Fed needing to get back to moving to more rate cuts than less in 2024. And on Thursday, as per our commentary, US producer prices were all of a sudden that big deal economic data that normally isn’t a big deal. read report
US rate expectations have seen another wild repricing in the aftermath of this latest hot US CPI print. The market is now looking for just 42 basis points of cuts in 2024, almost another full basis point of a cut since only last Friday. read report
The early portion of this week has been relatively tame, with the market not wanting to make any fresh bets on direction until more clarity comes later today in the anticipated US economic data. We have however highlighted an interesting disconnect between the rates market and currency market. read report
There is every sense right now that the market is doing its very best to hold off on reacting too much to recent economic data out of the US that would suggest the Fed should be considering less rate cuts in 2024 than what is currently being priced. read report
