Fed Meeting and Market Expectations - Navigating Market Turbulence
Last Friday, there was a notable speech from the Fed indicating that the current policy rate is in restrictive territory. Essentially, this suggests that the full effects of their tightening policies might not have fully materialized yet.
The anticipation is for substantial cuts in 2024, possibly around 124 to 125 basis points. While this seems a significant move, it's crucial to monitor the economic data influencing these decisions.
Chairman Powell's statement on the restrictive levels implies a halt in further rate hikes. The CME Fed Watch Tool displays a striking discrepancy. Weeks ago, there were predictions of a 14% to 28% likelihood of a hike in December, but currently, only 1% is expecting it. The overwhelming consensus leans toward a pause next week.
The upcoming week includes crucial PMI data and the NFP release. This sets the stage for a decisive Fed FOMC meeting next week. From the information at hand, a pause appears highly probable.
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