From Investing.com: 2024-06-29 05:31:02

Investors are eagerly anticipating when the Federal Reserve will cut rates in 2024, with initial expectations in March shifting to June, and perhaps as late as December. The investment outlook focuses on the path and destination of rate cuts, impacting factors such as the rising S&P 500 despite reduced cut expectations.

Economists at UBS emphasize that economic growth and earnings exceeding expectations are key drivers, with the timing of rate cuts possibly having minimal impact over the next year. The debate over rate cuts’ pace, magnitude, and terminal level will be central this summer, reflecting the consensus for 2024 macro conditions and varied outcomes for the following years.

The rate path debate is crucial for three reasons: the 10-year Treasury yield’s correlation to expected Fed rate cuts, differing opinions on the neutral federal funds rate’s restrictiveness, and uncertainty surrounding the Fed’s rate-cutting framework. Market volatility could result from sizeable shifts in rate cut expectations amid evolving economic conditions.



Read more at Investing.com: Path, destination of interest rates more important than timing of first cut: UBS By Investing.com