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23 Feb 2024

This chart shows the market pricing of a rate cut over the next three FOMC meetings.

March probability = 5% (was 80% at the start of the year) May probability = 29% (was 100% at the start of the year) June probability = 67% (was 100% at the start of the year) Source: Bianco Research

31 Jan 2024

As we are less than 24 hours away from the first Fed meeting of 2024, odds of rate cuts are pulling back

Odds of a rate cut this week are down to 2% and odds of a rate cut in March are down to ~40%. This is the lowest probability of a March rate cut since November 2023. Still, futures are pricing-in a base case of 6 rate cuts for a total of 150 bps in 2024. - All eyes will be on Fed guidance on June 30zh Source: The Kobeissi Letter

24 Jan 2024

It's official: markets are no longer expecting a FED rate cut in March 2024.

There's still a ~42% chance of rate cuts beginning in March, but this is a major shift in expectations. Just two weeks ago, markets saw a 90% chance of rate cuts beginning in March. Odds of rate cuts beginning at next week's Fed meeting are now down to ~2%. We are still seeing ~150 bps of interest rate cuts priced-in to futures. But, Fed pivot hopes are slowly pulling back. Source: The Kobeissi Letter

18 Jan 2024

🟥 The delinquency rate for credit card loans in 2023 has risen sharply

Which, based on historical patterns, suggests that the economy might be heading towards a recession.

17 Jan 2024

On the timing of the first cut, Waller said he believes that the FOMC will be able to lower the funds rate “this year.”

Main culprits from yesterday's pullback in Wall Street were comments by Governor Waller in a speech and discussion as they raised the risk that the first cut could come slightly later than the market's expectation of March and that the pace of cuts could be quarterly from the outset, rather than the market's more aggressive forecast of three initial consecutive cuts followed by a switch to a quarterly pace. On the speed of cuts, Waller said the funds rate “can and should be lowered methodically and carefully” and that he sees “no reason to move as quickly or cut as rapidly as in the past,” when the FOMC was combating recessions. Waller also noted that next month's scheduled revisions to CPI inflation (the seasonal factors will be revised on February 9) could influence his thinking on rates cuts, especially if the revised data show a less clear deceleration recently. The result was most evident in the drop in the market's expectations for a rate-cut in March...

15 Jan 2024

Weighted Average interestrate for sp500 non-financial firms is expected to pick-up in 2024e and 2025e but remains quite low by historical standard.

Source: Michel A.Arouet

15 Jan 2024

Is this the reason why the Fed might be forced to cut rates in March?

We could have: 1. Reverse repo ends (see chart below) 2. BTFP expires 3. Fed cuts (allegedly) 4. QT ends (allegedly) I.e 3 and 4 could counter-balance 1 and 2

12 Jan 2024

Uranium 16-Year High: Uranium going parabolic as it hits its highest price since November 2007

Source: barchart

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