Investor Adjustments to Expected Fed Interest Rate Cut in 2024

Investor Sentiment Shifts

The financial markets were unsettled by expectations surrounding the Federal Reserve's upcoming interest rate decision. Investors have reevaluated their portfolios with a change in the projected interest rate cut for 2024. Market sentiment points to a hawkish monetary policy direction, impacting various asset classes from stocks to cryptocurrencies, while inflation concerns loom large.

U.S. inflation and hawkish interest rate decisions

• Fears of rebounding inflation are forcing investors to prepare for a scenario few expected to confront in 2024.
• Strong economic reports suggest that inflation could creep back if the U.S. central bank lowers the interest rates prematurely.
• Futures markets now show investors expect rates to fall by 40 basis points this year. This is a significant change compared to the 150 basis points that were priced at the start of 2024.