Interest Rates – Expectations for the Fed’s Policy Rate Path Morgan Stanley expects more Fed rate cuts in the first half of 2025 than markets currently price in, as the impact of tariffs will likely hit the U.S. economy, despite inflationary risks. Image: Morgan Stanley Research
Interest Rates – Fed Funds Futures Curve After the Federal Reserve’s recent meeting, the slope of the fed funds futures curve has increased slightly, indicating a shift in market expectations regarding future interest rate movements. Image: The Daily Shot
Gold and U.S. 10-Year Real Rates Gold prices typically exhibit an inverse relationship with U.S. real interest rates, as investors often shift their holdings between gold and interest-bearing assets based on the opportunity cost of owning the precious metal. Image: Gavekal, Macrobond
CTA Positioning in U.S. Rates While CTAs’ current long positions in U.S. rates reflect a bullish outlook, they also serve as a potential contrarian indicator for savvy investors looking to capitalize on market reversals. Image: Deutsche Bank
U.S. Breakeven Inflation Rates vs. Oil U.S. breakeven inflation rates closely track oil prices, creating a complex challenge for the Federal Reserve as it navigates potential deflationary pressures in the coming months. Image: Real Investment Advice
G10 Policy Rates The majority of G10 central banks are either currently cutting rates or are expected to start soon, reflecting a broader global disinflationary trend and changing economic conditions. Image: Goldman Sachs Global Investment Research
U.S. Rates – 2-Year and 10-Year Treasury Yield Forecasts BofA forecasts the 10-year UST yield at 3.75% by year-end 2024, suggesting the possibility of a downward trend in borrowing costs, particularly if inflation continues to moderate and economic growth slows. Image: BofA Global Research
Interest Rates – Cumulative Rate Cuts vs. Hikes In 2024, global central banks are expected to implement significant policy rate cuts, marking it as the third largest year for such reductions in history, driven by falling inflation and the need to support economic growth. Image: BofA Global Investment Strategy
Rates and Dollar Forecast BofA expects the Fed to cut rates in September, adjusting its previous expectations. While market expectations for rate cuts have risen, the Fed hasn’t given a clear signal and will rely on data before making a decision. Image: BofA Global Research
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 Since 3000BC The end of the era of low interest rates could potentially have far-reaching implications for both consumers and businesses. Image: BofA Global Investment Strategy