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Page Jacobson

Sales Manager
Movement Mortgage
NMLS ID # 807444
6832 Morrison Blvd, Ste 130, Charlotte, NC 28211
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A Healthy Economy May Delay Rate Cuts

By: Movement Staff
January 26, 2024
It has been a quiet week for economic data releases, with investor attention remaining fixed on the timetable for future rate cuts. Over the past few weeks, we've highlighted the 'tug-of-war' between markets and the Fed regarding early rate cuts. Since Fed Chairman Jerome Powell's dovish commentary in December, markets had been pricing in a March rate cut above 50%, this has changed. Market sentiment, initially favoring a March rate cut (now below 50%), now leans towards a possible cut in June.

This change in narrative is primarily data-driven. As we discussed last week, economic reports have been consistently painting a picture of a healthy economy, allowing the Fed room to maintain a “higher for longer” policy to get inflation back down to target. On Friday, the release of the PCE Deflator came in softer than expected at 2.9%, marking the first time PCE has held a 2% handle since 2021. The phrase 'soft landing' has made its way back into analyst’s vocabulary this week, suggesting that the economy is achieving a balanced state.

It's difficult to argue against this perspective when considering solid consumer spending and a robust labor market, coupled with easing inflation as hinted by the PCE. With a plethora of economic data set to be released next week, it will be interesting to see which direction the narrative takes from here.

Author: Movement Staff

The Market Update is a weekly commentary compiled by a group of Movement Mortgage capital markets analysts with decades of combined expertise in the financial field. Movement's staff helps take complicated economic topics and turn them into a useful, easy to understand analysis to help you make the best decisions for your financial future.

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Page Jacobson
Sales Manager
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6832 Morrison Blvd, Ste 130, Charlotte, NC 28211
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NMLS # 807444

State License #CA-DOC807444, CO-100046249, FL-LO91089, GA-807444, NY Licensed Mortgage Banker-NYS Department of Financial Services, NC-I-153470, SC-BFI-MLO - 807444, VA-MLO-10044VA