Tonight's Heavyweight! The Probability of the Federal Reserve Cutting Rates in March is Only 1%, Full Market Logic Explanation
Tonight, global markets hold their breath as the Federal Reserve will announce its first interest rate decision for 2024. CME data shows that the market bets on the probability of a rate cut in March is only 1%, marking an epic reversal—two months ago this figure was as high as 90%.
The core contradiction lies in stubborn inflation: December CPI unexpectedly rebounded to 3.4%, combined with non-farm payrolls adding 353,000 jobs, completely dousing rate cut expectations. Recently, Federal Reserve officials have stated that they are "not in a hurry to act," and Powell may clearly state the "Higher for longer" stance tonight.
The market has already reacted in advance: the U.S. dollar index has stabilized at 104, the 10-year Treasury yield has returned to 4.2%, and gold bulls are exiting in droves. It is noteworthy that interest rate futures still price in a 125 basis point rate cut before December, indicating that the game between the market and the Federal Reserve is far from over.
As a ten-year macro observer, I believe the market should be wary of the "expectation gap trap." Betting on easing too early could come at a cost before inflation has substantially retreated. The real focus tonight should be on the dot plot revision and the balance sheet reduction path, as these are the underlying threads that will influence the market in the second half of the year.
If anyone finds themselves confused due to market fluctuations, unsure of how to deal with being trapped, or feels misled during their operations, feel free to reach out for a discussion!
Today's focus: BMT EOS DYM SUN
