Are rate cuts coming in 2024?
The PCE deflator number, which is the Fed's preferred gauge of inflation, was reported on Thursday. The report showed year-over-year and month-over-month numbers coming in a tenth lower than expectations. This report will serve as another example to the Fed that its policy is having the desired effect.
The increased talk of rate cuts has applied strong downward pressure on yields, with 10-year yields dropping approximately 20bps lower Thursday morning than they were on Black Friday. Fed Chair J. Powell is scheduled to speak on Friday and is expected to try and temper expectations of rate cuts, emphasizing a data-dependent Fed. All of this occurs while some investors now point to lingering high rates as the greatest threat to the Fed's coveted "soft landing."