Key Events This Week:
1. Fed Chair Powell Speaks - Wednesday 2. Initial Jobless Claims - Thursday 3. Fed Chair Powell Speaks - Thursday 4. Consumer Sentiment data - Friday 5. ~10% of S&P 500 reports earnings this week 6. Total of 12 Fed speaker events All attention remains on the Fed. Source: The Kobeissi Letter
Central Banks around the world are now cutting rates at the fastest pace in more than 3 years
When will the U.S. follow suit? Source: Barchart, BofA
The Fed is now expected to start cutting rates in May 2024
Here's how bonds have performed during prior rate-cutting cycles... Source: Charlie Bilello
The Fed's balance sheet hit its lowest level since May 2021 this week, down $1.1 trillion from the peak in April 2022
Annual changes in the Fed's balance sheet since 2002 by Charlie Bilello
The end of the rate hikes is typically followed by plateaus before rate cuts begin
The end of the rate hikes may not be here yet, and the Fed has already said a many times for months that the plateau is going to be “higher for longer". How long will the plateau be this time? Source: Wolfstreet
And we're back to Bidenomics trendline
Source: www.zerohedge.com
No change as expected
Nothing really new except that they acknowledge strong growth and strong wage gains versus September, effectively upgrading their economic assessment. This is the 3rd time they upgrade their view on growth. Our view is unchanged: we are due for a long pause. High rates is the new normal.
*BREAKING* BOJ Buys More Bonds to Slow Rising Yields a Day After Tweak Central bank acts after 10-year yield touches decade high - BLOOMBERG
The Bank of Japan stepped into the bond market unexpectedly Wednesday to curb the pace of gains in sovereign yields, just a day after announcing it was loosening its grip on debt prices. The central bank’s unscheduled purchase operation statement came as the benchmark 10-year bond yield touched 0.97% — a fresh decade-high but still below the 1% cap it removed in favor of a more flexible policy setting. There was very little immediate market reaction to the move, with traders trimming one basis point off the 10-year yield before it recovered half of that. Bond futures pared losses and the yen, which is sensitive to shifts in interest rates, shed a fraction of its advance versus the dollar.
