The Return of Good Times™?
Roaring Twenties rerun? Crypto assets are down slightly on the week, taking a well-deserved break from the pump after 8 consecutive weeks of green candles, but interest rate optimism has market participants heralding the return of the bull market! How much further can we run?
America’s Federal Reserve chose Wednesday to leave interest rates unchanged for their third meeting, citing the economy “has slowed” since Q3 2023 and noting for the first time that inflation “is easing.”
SUMMARY OF FED DECISION (12/13/23):
— The Kobeissi Letter (@KobeissiLetter) December 13, 2023
1. Fed leaves rates unchanged for third straight meeting
2. Fed says growth of economy "has slowed" since Q3 2023
3. Most Fed officials see interest rate cuts in 2024
4. Median projection shows 3 rate cuts in 2024
5. Fed sees 4.1%…
The Fed sees itself cutting interest rates 3 times next year and markets are taking the over on this bet, projecting that there will be 5 cuts in 2024 and anticipating that they could begin as soon as March, with a 31% chance there are even two cuts just 3 months into the year.
Traders are in search of narrative and the bull case is not being shy about presenting itself! With no obvious signs of an impending recession in sight and the labor market expected to remain resilient, easing rates could provide the fuel crypto assets need to rocket to new all-time highs.
If we have truly arrived at Soft Landing Island, risk assets (like crypto and stocks) will only have one way to move: up!
The Fed has arrived on soft landing island.
— Andy Constan (@dampedspring) December 13, 2023