Federal Reserve to set market pace more than ever in 2024 – Mark Gilbert

In the complex landscape of global economics, the Federal Reserve's upcoming decisions loom large, with traders and portfolio managers closely watching for signs of a policy shift. After a series of interest-rate hikes, the market anticipates a swift and substantial easing cycle. Treasuries face an unpredictable journey amid central bank actions, geopolitical uncertainties, and a US presidential election. Meanwhile, the euro zone grapples with a manufacturing recession, and global equities strive to recoup losses. As volatility remains a wildcard, credit markets navigate tightening spreads amidst the delicate balance of improving borrowing conditions and potential policy dilemmas.

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The Fed Will Set the Pace for Markets More Than Ever This Year: Mark Gilbert

By Mark Gilbert and Marcus Ashworth

The surge in consumer prices that drove inflation way past central banker's targets in recent years triggered a wave of interest-rate hikes. But as policymakers were desperate to rebuild their credibility as overseers of monetary stability, their zeal threatened to savage growth and spark unemployment. The pause in hiking we've seen in recent months is now expected to be followed by an easing of policy.

As the charts below argue, what the Federal Reserve does next will be more important than ever in determining how financial markets behave in the new year.

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