Rate cuts are coming! Rate cuts are coming!

Rate cuts are coming! Rate cuts are coming!

What a year it’s been! From recession fears to market rallies, take a look at 2023 in pictures.

Read our 2023 year in review for a sneak peek at what the forecasters say.

Will concerns around energy security, climate change, and rising geopolitical risks accelerate the push to renewables and create a new commodity supercycle? Who will benefit and why? Find out more in the latest EXANTE RESEARCH report, Renewables and the New Commodity Superpowers.


Global market indices
Fixed Income
Commodity sector news
Key data to move markets this week
Global macro updates

US Stock Indices

Nasdaq 100 +3.81% MTD and +51.34% YTD
Dow Jones Industrial Average +1.74% MTD and +10.35% YTD
+2.93% MTD and +9.06% YTD
S&P 500 +1.20% MTD and +20.39% YTD

The S&P 500 topped 4,700, the Dow Jones Industrial Average hit a record and the Nasdaq 100 extended this year’s surge to over 50%. The Dow Jones Industrial Average notched its first record high close since January 2022 after the Federal Reserve signalled lower borrowing costs are coming in 2024.

Mega caps: A good week for the “magnificent seven” mega caps as equities rallied on rate cut expectations. Apple, Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia are all up, while Tesla is down, possibly due to the recall of more than 2 million vehicles, almost all it has sold in the US. The recall came after the US auto-safety regulator, the National Highway Traffic Safety Administration (NHTSA), determined its driver-assistance system, Autopilot, was faulty. Tesla will send out a softwareupdate in an attempt to fix the problem.

Energy stocks had a mixed week as the energy sector performance did rise slightly overall, but continuing concerns about over supply in 2024, rising Middle East tensions, and slowing economic growth appeared to have weighed on traders’ minds. Occidental Petroleum, Chevron, Marathon Petroleum, Apa Corp (US), Baker Hughes, Phillips 66, and ConocoPhillips are all up, while Halliburton, ExxonMobil, Shell, and Energy Fuels are all down this week.

Materials and Mining stocks had a generally good week. Yara International, Mosaic, Freeport-McMoRan, CF Industries Holdings, Nucor Corporation, Newmont Mining, and Albemarle Corporation are all up. Only Sibanye Stillwater is down this week after the National Union of Mineworkers (NUM) convened its extended National Executive Committee (NEC) and agreed to resolution that the NUM PWV Region must embark on a march against Sibanye Stillwater on issues of health and safety and transformation. The date of the protest march would be announced earlier next year.

European Stock Indices

Stoxx 600 +2.35% MTD and +11.20% YTD
DAX +3.40% MTD and +20.41% YTD
CAC 40 +3.02% MTD and +16.33% YTD
 +0.38% MTD and +22.69% YTD
 +1.88% MTD and +27.79% YTD
FTSE 100 +1.27% MTD and +1.30% YTD

Other Global Stock Indices 

MSCI World Index +1.18% MTD and +16.06% YTD
Hang Seng
 -4.78% MTD and -17.96% YTD


The US dollar had a bumpy week this week as traders began to consider that policy rate expectations may have gone too far before the Fed signalled that rate cuts are likely on the not too distant horizon. Fed Chair Jerome Powell said the Fed now thinks it has done enough and that rate increases are not the base case anymore. The GBP is -0.03% MTD and +4.31% YTD against the USD, falling significantly after data showed the UK economy shrank in October and raising the risk of recession. The Bank of England (BoE) kept rates steady at 5.25% at its meeting today with BoE Governor Andrew Bailey saying that there is “still some way to go” before inflation hits its target. The EUR is -0.12% MTD and +1.60% YTD against the USD as inflation has dropped more rapidly than anticipated, suggesting a pivot by the ECB between March and May next year.


Bitcoin +13.88% MTD and +159.23% YTD
Ethereum +10.61% MTD and +88.90% YTD

Bitcoin and other cryptocurrencies continued to flourish this week as news of ETF applicants' discussions with the SEC, the Fed signal of future rate cuts, and the increased likelihood of a soft landing have buoyed investor expectations.

Fixed Income

US 10-year yield to 4.01%.
German 10-year yield to 2.17%.
UK 10-year yield to 3.83%.

US benchmark 10-year yields fell over the past week, with Treasury yields slipping to their lowest level since August after the Fed signalled the end of its tightening cycle and struck a dovish tone for the year ahead.


Gold to $2,022.49 per ounce.
Silver to $23.32 per ounce.
West Texas Intermediate crude to $69.83 a barrel.
Brent crude to $74.26 a barrel.

After a shaky week, gold prices rose more than 1% on Wednesday after the Fed signalled an end to its interest rate hike cycle and indicated possible rate cuts next year, sending the dollar and Treasury yields down. This drop in the dollar makes gold less expensive for other currency holders, while the drop in yields make it less appealing to investors, particularly as geopolitical risks are rising around the world. 

Oil prices bounced back after tumbling to near six-month lows on Tuesday. This happened as US crude oil stocks, including those in the Strategic Petroleum Reserve, declined 4.3 million barrels in the week ended 8 December and as an attack on a tanker in the Red Sea threatened Middle East oil supplies.

Note: As of 5 pm EST 13 December 2023

Key data to move markets this week


Thursday: EU Leaders Summit, Spanish Harmonised Index of Consumer Prices, and ECB Monetary Policy Statement and Press Conference.
EU Leaders Summit, German HCOB Composite, Manufacturing, and Services PMIs, French and Italian CPI, and Eurozone HCOB Composite, Manufacturing and Services PMIs.
German IFO Business Climate, Current Assessment and Expectations Surveys.
Eurozone Harmonised Index of Consumer Prices.
German Gfk Consumer Confidence and Eurozone Consumer Confidence.


Thursday: Bank of England Interest Rate Decision, Minutes, and Monetary Policy Report.
GfK Consumer Confidence, S&P Global/CIPS Composite, Manufacturing and Services PMIs and a speech by BoE Deputy Governor for Markets and Banking, David Ramsden.
CPI, PPI Core Output, PPI and RPI.


Thursday: Initial Jobless Claims and Retail Sales.
NY Empire State Manufacturing Index, Industrial Production, S&P Global Composite, Manufacturing and Services PMIs.
Building Permits and Housing Starts.
Consumer Confidence and Existing Home Sales Change.
GDP, Initial Jobless Claims, Core Personal Consumption Expenditures, Personal Consumption Expenditures Prices, and Philadelphia Fed Manufacturing Survey. 


Friday: Industrial Production and Retail Sales.
PBoC Interest Rate Decision.

Global Macro Updates

What the Fed said. On Wednesday the Federal Reserve kept interest rates at the current 5.25% - 5.50% range with the median forecast of 3 rate cuts in 2024 totalling 75 basis points, a sharper pace of cuts than indicated in September. In a new policy statement, Fed officials explicitly acknowledged that inflation "has eased over the past year," and said they would watch the economy to see if "any" additional rate hikes are needed, suggesting they may not be raised again. The vast majority, 17 of 19 Fed officials, project that the policy rate will be lower by the end of 2024 than now. The decision came as both CPI and PPI continued to slow down. CPI increased 0.1% in November and remained unchanged at 3.1% year-on-year while PPI increased 0.9% year-on-year with Core PPI gaining 0.1% for a 2.5% year-on-year rise. The dot plot projections suggested headline personal consumption expenditures inflation ending 2023 at 2.8% and falling further to 2.4% by the end of next year. The unemployment rate is seen rising from the current 3.7% to 4.1%, the same rate projected in September, while economic growth is seen slowing from an estimated 2.6% this year to 1.4% over 2024.

Although markets have interpreted the forecasts as dovish with Powell admitting that FOMC members discussed when to cut rates as inflation continues its descent toward their 2% goal, he did say during the press conference that inflation remains too high and that further rate increases can’t be ruled out.

How long will the ECB hold its ground? The ECB kept rates unchanged during its meeting today. "Underlying inflation has eased further," the ECB said. "But domestic price pressures remain elevated, primarily owing to strong growth in unit labour costs." It reiterated its previous comment that "rates will be set at sufficiently restrictive levels for as long as necessary." The ECB'supdated economic projections suggest lower inflation and growth with headline inflation to average 5.4% in 2023, 2.7% in 2024, 2.1% in 2025 and 1.9% in 2026. With inflation currently at 2.6%, expectations are that the ECB should be cutting interest rates earlier and faster than the BoE next year, largely because inflation is much nearer the target. The expectations will put ECB President Christine Lagarde under pressure to defend or ditch the “higher rates for longer” mantra that she has been promoting to the markets.

UK economy puts BoE on edge. The BoE, as widely expected, kept rates at its 15-year high of 5.25% today in a 6-3 vote, for the third monetary policy meeting in a row. With GDP falling by 0.3% in October, inflation more than double the target at 4.6% in October, and wage rises falling but still too high at 7.3% in the three months to October, the BoE will need to see more signs of easing price pressures to consider when they may start cutting rates next year. However, as noted by the Financial Times, with the US Fed signalling rate cuts next year, traders in swaps markets are now pricing in 1.2% of rate cuts by the Bank of England next year, up from 1.0% ahead of the Federal Reserve meeting. The BoE said that British interest rates needed to stay high for “an extended period.” Governor Andrew Bailey noted that there is still some way to go in the fight with inflation and that the Bank would continue to watch the data closely, and take the decisions necessary to get inflation all the way back to 2%. The BoE repeated warnings that “further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures.” The Bank says the decision whether to increase or to maintain Bank Rate at this meeting was “again finely balanced.”

The BoE will be wary of signalling a rate cut given the impact it would have on Sterling and the inflationary impact it would have on the UK economy. There is also the tax cuts that Treasury Secretary Jeremy Hunt announced in November and the potential impact those will have on the economy and inflation.

A good agreement or a cop-out? COP28 ended on Wednesday with an agreement being reached by countries to “transition” countries' energy systems away from fossil fuels. According to the agreement, countries are called to contribute to a global transition effort and not forced to shift on their own. The deal calls on countries to quit adding carbon dioxide to the atmosphere by 2050, to triple the amount of renewable energy installed around the world by 2030, and to slash emissions of the greenhouse gas methane. The agreement is seen as a compromise between European leaders and small island states that are most affected by climate change vs oil producing states like Saudi Arabia, the UAE, and others. The agreement was the first to tackle the need to directly transition away from fossil fuels. 

DISCLAIMER: This article is provided to you for informational purposes only and should not be regarded as an offer or solicitation of an offer to buy or sell any investments or related services that may be referenced here.

While every effort has been made to verify the accuracy of this information, EXT Ltd. (hereafter known as “EXANTE”) cannot accept any responsibility or liability for reliance by any person on this publication or any of the information, opinions, or conclusions contained in this publication. The findings and views expressed in this publication do not necessarily reflect the views of EXANTE. Any action taken upon the information contained in this publication is strictly at your own risk. EXANTE will not be liable for any loss or damage in connection with this publication.

This article is provided to you for informational purposes only and should not be regarded as an offer or solicitation of an offer to buy or sell any investments or related services that may be referenced here.

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