You can’t have a soft landing and a Fed pivot.
Expected Fed funds rates by December 2023
After a dismal 2022, markets are off to a flying start this year. Chinese and European equities are leading the way – the FTSE 100 is close to an all-time high and even some of the epic ‘fails’ from last year’s sell-off are enjoying a decent bounce (Bitcoin +39% and Peloton +59% so far in January).
Behind this rally is a growing belief that we could have a ‘soft landing’. That the recession so widely predicted for 2023 can be avoided or at least delayed. This could happen. Higher interest rates will take time to impact economic growth and China’s reopening is playing a big part in this newfound optimism.
