The Federal Reserve hasn't lost its role as one of the main driving forces for markets.
In December 2023, the Fed put its foot on the accelerator for stocks — perhaps inadvertently — when it announced its projection of three rate cuts for 2024. But the latest minutes of the Fed meeting in December caused stocks to plummet.
The latest minutes shows that U.S. Federal Reserve officials are largely in favor of interest rate cuts in 2024, but there was unusually elevated degree of uncertainty over policy path, that is when or even if cuts will actually come this year.
The narrative throws cold water on market, which originally anticipated six rate cuts in 2024. Also the enthusiasm has pushed the markets to set all time high. Obviously the markets have gotten ahead of themselves. Hammered by the minutes, the markets declined sharply early in January 2024, as the 10-year U.S. Treasury yield briefly topped the 4% mark as investors fretted over unexpectedly higher-for-longer interest rates.
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