Mid-Week Update
March 27, 2024
As expected, a shortened Easter week resulted in choppy and low-volume markets.
The Fed has told us they will cut and are close to pulling the trigger.
This has collapsed implied volatility in the front-end to the lows since they started hiking 2 years ago.
After more than 300 combined rate hikes in 2022/2023 we have now already seen 12 cuts this year around the globe with plenty more in the pipeline to come.
The first chart shows the implied forward curve pricing across the developed world.
The second chart shows the cumulative amount of rate cuts priced across varying time horizons. Across the G-10, the expectations of a sum of 30 (25 bps) cuts to come over a year and 47 over two years.
This all looks and smells like a Goldilocks regime, but a lot of it has already been priced in.
What happens if we have a regime shift?
I will look at this question further below.
In addition, let’s examine the charts as of mid-week and what’s been flagging.
A reminder that you can now also use my models in TradingView scripts, which I made available for subscribers to use on their charts for a fee. If you are interested, ping me an email with your TV username.
I am close to reaching capacity in terms of the number of users granted access. After that, I want to limit the use, with only paying subscribers having the option to subscribe.