A once-certain June rate cut is looking a whole lot like a coin flip now

4/8/24 11:45AM

All this good economic news may delay the Fed rate cuts the stock market has been counting on.

The most recent Q4 GDP report was good. The March jobs report was great. And the manufacturing sector — which was a looking weak for a while — may be springing back to life.

That’s good for people who work for a living.

But it’s less good for the stock market, as economic strength, all else equal, could keep inflation higher than it otherwise would be, and too high for the central bank to feel comfortable about cutting.

You can see from the chart below, the market-based odds of a rate cut at the June meeting have fallen from near certainty at the start of the year to roughly 50% at the moment.

And that has cooled off what was a stellar start to the year for stocks.

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