No Rate Cuts?

By Matthew Gutierrez and Shawn O'Malley · April 11, 2024

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— Matthew & Shawn

Here’s today’s rundown:

Today, we'll discuss the biggest stories in markets:

• Investors absorb the possibility of no rate cuts this year
• Can the golf boom last?

This, and more, in just 5 minutes to read.

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In The News

?? Markets Digest Possibility Of No 2024 Rate Cuts

The unthinkable is now thinkable. That’s the prospect of no rate cuts this year. Predicting no cuts just a few months ago would’ve left you all alone on Wall Street, excluded from the cool kids’ table, which was betting on at least three rate reductions this year.

Alas, upticking inflation has thoroughly disrupted that narrative. While cuts were originally expected as soon as June, the first full rate cut now isn’t priced to happen until November, with doubts about any cuts this year becoming increasingly mainstream on Wall Street.

• The Nasdaq and S&P 500 fell almost 1% in response, underscoring investors’ unease with the prospect of sticky inflation above 2% (actually, above 3%.)

Across the curve: But it’s not just short-term interest rates adjusting to a hotter inflation outlook; Wednesday’s hot CPI report rippled across the yield curve.

• Thanks to three straight higher-than-expected monthly inflation reports, Bloomberg notes, “yields across the (Treasury bond) maturity spectrum were higher by around 20 basis points in late afternoon trading,” with two-year Treasuries moving up the most to nearly 5%.
• One bond fund manager added, “I see a 75% chance that the Fed will start cutting interest rates in September and a 25% likelihood of no cuts at all this year.”

Why it matters:

As we’ve mentioned previously, two things fundamentally underpin stock prices: corporate earnings—the driver of companies’ equity value, which is what investors pay to own—and discount rates, which represent investors’ opportunity costs and determine...