Turning the corner - House View Q2 2024

Our view of global markets

All eyes are on the US…

- With the scene set for a historic cut in interest rates, US developments are more key than usual for global markets. Based on the latest data, we think the US economy is heading for a soft landing – the holy grail for central banks, where they dampen inflation without tipping the economy into recession.
- With a mild slowdown in sight, the most likely date for the US Federal Reserve (Fed) to cut interest rates is now July – a “pivot” that represents an official invitation to re-enter markets after the 2022 reset and should provide continued momentum to bonds and equities in the coming months.
- The question then is how rapidly – and by how much – the Fed cuts rates. On this score, markets expect much less than they did in late 2023. We have thought for some time that US rates will be only 75bps lower by the end of 2024 – at best. US labour market resilience may give the Fed pause for thought.