Market – Current Pricing of Policy, Political and Macro Outcomes Investors are confidently predicting a 100% chance of a Fed rate cut on September 18, a 75% likelihood of Donald Trump winning the U.S. election on November 5, and a 68% probability of a soft landing within the next 12 months. Image: BofA Global Investment…
Global Policy Rate Hikes In June 2024, for the first time since October 2020, no major central banks around the world raised interest rates, marking a significant shift in global monetary policies. Image: BofA Global Investment Strategy
Interest Rates – Central Bank Policy Rate Hikes vs. Cuts Emerging market central banks typically take the lead in initiating monetary tightening and easing cycles. In 2024, their approach has shifted away from aggressive easing. Image: BofA Global Investment Strategy
Interest Rates – Expectations for the Fed’s Policy Rate Path Nomura still expects 25 bp rate cuts in July and December 2024, as well as four additional 25 bp rate cuts in 2025. Image: Nomura
Central Banks Policy Rates Are global negative interest rates unlikely to be revisited soon, as many policymakers have concluded that they have not worked as intended? Image: Deutsche Bank
U.S. Implied Policy Rates – Federal Funds Futures Market expectations for Fed policy have swung dramatically over the past few months. Image: J.P. Morgan Asset Management
Fed – Number of Policy Rate Adjustments Throughout history, the Federal Reserve has made decisions that are not influenced by the election cycle, as the central bank’s actions are predominantly guided by economic indicators and its dual mandate. Image: BofA Global Research
Central Banks – Global Monetary Policy Stimulus Leads Global Manufacturing PMI As global monetary policy stimulus tends to lead global manufacturing PMI by 8 months, could this signal the end of the economic slowdown? Image: Topdown Charts
Median Policy Rate Projections in the Fed’s Summary of Economic Projections The anticipation of rate cuts in 2024 and beyond is generally viewed as bullish for equity markets, as it signals a potential easing of monetary policy that can support economic growth and stock prices. Image: BofA Global Research
U.S. Dollar and Policy Rate: Fed Minus G10 Excluding U.S. Should investors turn bearish on the U.S. dollar? Image: Alpine Macro