What the end of the Fed’s tightening cycle means for the economy and markets
- The Federal Reserve’s tightening cycle is over after 11 rate increases since March 2022
- Inflation is falling and growth is slowing
- The odds of a U.S. recession in 2024 are rising
- Both monetary and fiscal policy will be slow to respond to a recession
- The Fed is well on its way to achieving its inflation target
- The economy is now slowing below trend, pushing it towards contraction
- U.S. fiscal policy is unlikely to support the economy before 2025
- A recession in 2024 will have predictable consequences for investors
- High quality bonds, including longer duration Treasuries, will fare better
- The dollar will be vulnerable as bonds rally and the Fed cuts rates
- The 2024 recession could impact the outcome of the U.S. presidential election
The Federal Reserve’s tightening cycle is over after 11 rate increases since March 2022, as inflation falls and growth slows. The odds of a U.S. recession in 2024 are rising, and both monetary and fiscal policy will be slow to respond. The Fed is well on its way to achieving its inflation target, but the economy is now slowing below trend, pushing it towards contraction. U.S. fiscal policy is unlikely to support the economy before 2025. A recession in 2024 will have predictable consequences for investors, with profits growth slumping and the outlook for equities grim. High quality bonds, including longer duration Treasuries, will fare better. The dollar will be vulnerable as bonds rally and the Fed cuts rates. Additionally, a 2024 recession could impact the outcome of the U.S. presidential election.
Factuality Level: 6
Factuality Justification: The article provides analysis and predictions about the future of the Federal Reserve’s interest rate policy and the potential impact on the economy and markets. While the author presents data and historical trends to support their arguments, it is important to note that economic predictions are inherently uncertain and subject to change. The article does not contain any obvious misleading information or bias, but it is based on the author’s perspective and interpretation of the data.
Noise Level: 7
Noise Justification: The article provides a thoughtful analysis of the current state of the economy and the potential consequences of the Federal Reserve’s actions. It presents data and historical context to support its claims. However, it does not provide actionable insights or solutions.
Financial Relevance: Yes
Financial Markets Impacted: The article discusses the Federal Reserve’s tightening cycle and its impact on the economy and markets, which can have implications for financial markets and companies.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article primarily focuses on the Federal Reserve’s monetary policy and its potential impact on the economy and markets. While it discusses the possibility of a recession, there is no mention of any extreme events or their impact.
Public Companies: UBS (UBS)
Key People: Larry Hatheway (Co-founder of Jackson Hole Economics, Former Chief Economist of UBS)
Reported publicly:
www.marketwatch.com 
