The Bull's Pen

Overview : Upside risks to inflation and downside risks to growth Despite signaled rate cuts, interest rates are likely to stay elevated as: Still tight monetary policy Higher borrowing needs by US Treasury (and lower foreign demand for US Treasury bonds) Inflation still above Fed’s 2% target Factors unrelated to Fed policy may slow consumer spending Households have less excess savings compared to COVID levels Student loan payments restarting Outlook for corporate performance Outlook for lending Outlook for inflation Many are optimistic about the economy due to possible rate cuts in 2024. However, despite resilient strength in the economy, there is still more downside risk than potential upside surprise. While soft landing is not impossible, it is likely that interest rates will continue to be elevated and for longer than the market expects.  Key Trends and Analysis: Despite signaled rate cuts, interest rates are likely to stay elevated Even if rate cuts were to persist, they’re not go