Daily Brief Macro: Out of the Box: 6 Reasons the Fed Will Be Hiking Rates in 2024 and more

In today’s briefing:

Out of the Box: 6 Reasons the Fed Will Be Hiking Rates in 2024

Even though the Santa rally in US STIRS has largely been reversed, markets are still pricing in 2.5 full cuts by the end of this year or so with the first to come around summer time.
Currently, one of the most unappreciated risks by markets would be the Fed actually hiking rates in 2024 and thus we thought we would present 6 compelling and thought provoking arguments for why the Fed hiking in 2024 might not be impossible after all (our base case is a hold).
The first argument has to do with year-on-year inflation seemingly having reached its equilibrium at 3%, a range in which it has found itself for the last year or so.

This week, the price of gold surged past USD 2,300 per Troy Ounce for the first time, and it was not because Western investors were rushing in.
Equity markets refuse to decline due to excessive fiscal stimulus, central bank eagerness to cut rates, and improving economic momentum.
Despite falling bond volatility, the MOVE index remains elevated relative to the VIX index, a sign of changing times.

Welcome to this week’s rundown of our portfolio, its performance, and our most clear-cut conviction for the period ahead.
The cocktail of better economic activity and geopolitical tensions provided tailwinds for our long crude bet, which reached its take profit level Tuesday, and hence we are out of our oil position with a significant profit.
Most notably, and reflecting our still cyclically tilted portfolio allocations, we see growth trending higher in the cyclical parts of the economy through April on our models and nowcasts.

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