“There is very high certainty that the Fed will keep to its policy stance unchanged in the upcoming meeting. The US growth momentum coupled with the still resilient US labour market reinforces our expectation for the Fed to keep its current Fed Funds Target Rate (FFTR) unchanged at 5.25-5.50% through mid-2024 where we forecast three 25 bps of rate cuts, one each in Jun 2024, 3Q2024 and 4Q2024 respectively,” says UOB Global Economics and Market Research.
If the 10-year yield on US treasuries (10YUST) is able to ease towards 4.07%, there is a chance that the 50-day moving average (now at 4.12%) crosses below the 200-day moving average at 4.07% in a negative move. A negative signal for the 10YUST should be good for equity markets.
The first Federal Open Market Committee (FOMC) meeting is during the week of Jan 29 - Feb 2, on Feb 1. Economists will be watching the Federal Reserve minutes closely but any hints of cuts or easing are unlikely to materialise. Ironically, of concern is strong US GDP growth coupled with a strong US equity market.
