Santa Claus rally
Markets have been pricing significant monetary easing next year from the US Federal Reserve.
But if you were expecting any pushback in today's FOMC Statement...well, you'd be disappointed!
The latest round of Fed projections point to a series of interest rate cuts in 2024 (perhaps two to four) with more rate cuts to come in 2025, with the implied neutral rate - essentially where things are eventually heading - back down at 2.5 per cent.
Fed Chair Jerome Powell now believes that interest rate cuts have come into view.
It's been a while between drinks, but you can finally roll out the Ross from Friends "pivot" memes again...
It looks like the Fed has finished its hiking cycle, then, with the debate now shifting to how soon the first the interest rate cut will come...perhaps as soon as March.
Market pricing is looking for up to six interest rate cuts in the US next year, while Australia's benchmark 3-year bond yield plunged to under 3.8 per cent today.
The UK's 2-year gilt yield has also plummeted from 5½ per cent in June to 4.36 per cent today, with markets pricing rate cuts next year for the Poms from the Bank of England too.
In New Zealand inflation also appears to be falling faster than expected.
Stock markets will of course love this...position for a belter of a Santa Claus rally into Xmas!
I also reckon you can forget any of those bearish property forecasts for 2024...global interest rates are heading back down, and it's so close market participants can just about taste it.
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