![](/sites/hk/files/styles/standard_banner_xs/public/header/axa-im-insight-article-building-g1196126435_0.jpg?h=8a8e2205&itok=hyFSeUbv)
US reaction: Powell exacerbates cut expectations – accident or design ?
- 15 December 2023 (5 min read)
Key points:
- Fed left rates on hold by unanimous decision.
- Statement acknowledged softening in growth and progress in inflation, but that it remained elevated.
- Fed shifted bias to state that it would determine “any” further tightening – additional hikes “not off the table, but not base case”
- And Fed Chair Powell presented some of the right phrases to dissuade markets from aggressive rate cut pricing
- However, Powell also said the FOMC had preliminary discussions about cuts and was wary of “making mistake” of “holding on for too long”.
- These comments proved a red rag to a bull (market) with rates and equities markets surging.
- We do not think this was the Fed intended – it was contrary to their forecasts.
- We continue to suggest just three cuts next year from June, but relative to current market pricing that will deliver material disappointment if it proves correct.
Exhibit 1: December’s Summary Economic Projections
Disclaimer
This website is published by AXA Investment Managers Asia Limited (“AXA IM HK”), an entity licensed by the Securities and Futures Commission of Hong Kong (“SFC”), for general circulation and informational purposes only. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy, sell or enter into any transactions in respect of any investments, products or services, and should not be considered as solicitation or investment, legal, tax or any other advice, a recommendation for an investment strategy or a personalised recommendation to buy or sell securities under any applicable law or regulation. It has been prepared without taking into account the specific personal circumstances, investment objectives, financial situation, investment knowledge or particular needs of any particular person and may be subject to change at any time without notice. Offering may be made only on the basis of the information disclosed in the relevant offering documents. Please consult independent financial or other professional advisers if you are unsure about any information contained herein.
Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee such opinions, estimates and forecasts made will come to pass. Actual results of operations and achievements may differ materially. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Information herein may be obtained from sources believed to be reliable. AXA IM HK has reasonable belief that such information is accurate, complete and up-to-date. To the maximum extent permitted by law, AXA IM HK, its affiliates, directors, officers or employees take no responsibility for the data provided by third party, including the accuracy of such data. This material does not contain sufficient information to support an investment decision. References to companies (if any) are for illustrative purposes only and should not be viewed as investment recommendations or solicitations.
All investment involves risk, including the loss of capital. The value of investments and the income from them can fluctuate and that past performance is no guarantee of future returns, investors may not get back the amount originally invested. Investors should not make any investment decision based on this material alone.
Some of the services listed on this Website may not be available for offer to retail investors.
This Website has not been reviewed by the SFC. © 2024 AXA Investment Managers. All rights reserved.