Fed Funds Forecast vs. Market Pricing While the Fed has made progress in the fight against inflation, BofA holds a significantly more hawkish view on Fed policy compared to market expectations. Image: BofA Global Research
Interest Rates – Cumulative Rate Cuts vs. Hikes In 2024, global central banks are expected to implement significant policy rate cuts, marking it as the third largest year for such reductions in history, driven by falling inflation and the need to support economic growth. Image: BofA Global Investment Strategy
U.S. Private Sector Financial Assets % of GDP The growing disconnect between U.S. financial asset values and GDP raises concerns about the widening wealth gap, potential systemic risks, economic instability, and policy challenges. Image: BofA Global Investment Strategy
U.S. Inflation – Core PCE and Core CPI Inflation is trending downward towards the Fed’s 2% target, a crucial aspect of its monetary policy aimed at maintaining price stability and anchoring inflation expectations at a moderate level. Image: BofA Global Research
Survey – Credit Investors: What Are Your Biggest Concerns? The 2024 U.S. election outcome could significantly impact fiscal policy, debt, interest rates, inflation, and economic growth, which are key concerns for U.S. credit investors. Image: BofA Credit Investor Survey
Fed – The Distribution of FOMC Voters Should investors bet for a hawkish Fed policy tone in 2025, as the central bank remains focused on its fight against persistent inflation, even if it means risking some economic pain? Image: BofA Global Research
U.S. Core CPI Inflation Morgan Stanley expects U.S. core CPI inflation to cool off in April to 0.29% month-on-month, which should give the Fed some breathing room in terms of their monetary policy decisions. Image: Morgan Stanley Research
U.S. 10-Year Treasury Yield Since 1790 The trajectory and duration of the U.S. bond bear market can be influenced by factors such as inflation, economic growth, and the Federal Reserve’s monetary policy. Image: BofA Global Investment Strategy
Interest Rates – U.S. Federal Funds Rate Expectations BofA expects a 3.5-3.75% terminal rate in this cutting cycle, up 50bp from their previous forecast. This suggests a need to tighten monetary policy to control inflation and maintain economic balance. Image: BofA Global Research
Global Central Bank Balance Sheets The ongoing trend of central banks purchasing global debt since 2008, will depend on dynamic economic conditions, inflationary forces, and the specific monetary policy goals of each individual central bank. Image: Real Investment Advice
Fed Funds Rate Less U.S. Core PCE Is the Federal Reserve’s monetary policy really restrictive in order to return inflation to 2%? Image: Morgan Stanley Wealth Management