Good Tidings for the Economy

The holiday season has brought good news for the economy. Inflation, while still above target, continues to cool:

The Fed has indicated that it’s likely reached the end of its hiking cycle, and is now expecting to cut rates in 2024. Most FOMC members are projecting 2-4 25bp rate cuts in 2024, with a median of 3:

Source: Federal Reserve

Markets are even more optimistic, and are anticipating a 1.5% reduction in rates next year. Stocks have also surged, as the S&P 500 has risen nearly 3% in the past five days, and is nearing a record high. Long-term Treasury yields have dipped sharply, with the 10-year and 30-year rates each falling from around 5% in October to about 4% now.

While the proverbial soft landing for the economy is not guaranteed, it is nonetheless notable that inflation has come down significantly with a minimal impact on the labor market. Hopefully the heavy lifting is done, with the economy on a glide path to normalized interest rates and inflation. 

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This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument or investment strategy. This material has been prepared for informational purposes only, and is not intended to be or interpreted as a recommendation. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice.