...wow, only expecting 3 rate cuts from here to end of next year
...but even with fewer rate cuts, it does not faze the market.
...the market or rather Wall St market participants are inspired by forthcoming Trump 2.0 policies to re-invigorate the business sector that they're prepared to see beyond fewer rate cuts. Their forward assessment of a soft landing with much lower probability of a recession makes rate cuts less of a demanding issue.
...such animal spirits could continue to drive Wall St higher for longer despite market complacency and somewhat stretched valuations but I reckon by Sept2025 the reckoning arrives. 6 months after the first 100 days honeymoon period of the new Trump presidency would be just about enough time for adversity to brew and then suddenly rear its ugly face.
Fed Funds Rate: Market Expectations...
-Dec 2024: 25 bps cut to 4.25-4.50%
-Jan 2025: Hold
-Mar 2025: 25 bps cut to 4.00-4.25%
-May 2025: Hold
-Jun 2025: Hold
-July 2025: Hold
-Sep 2025: 25 bps cut to 3.75-4.00%
-Oct 2025: Hold
-Dec 2025: Hold
