Treasuries extended their November rally, the dollar fell, and stocks rose on expectations that the Federal Reserve will be able to ease policy next year.
Fed swaps now predict a rate cut of more than 100 basis points by the end of 2024. In a speech titled "Something Appears to Be Giving," Governor Waller, one of the most hawkish officials, stated that he is "increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2%." While acknowledging the many unknowns, his colleague, Bowman, refrained from predicting a hike.
Two-year yields have fallen by 14 basis points to around 4.75%. The dollar has dropped to its lowest level since August. The S&P 500 managed to close with a small gain after swinging between small gains and losses. The index, which is nearing "overbought" territory, is still on track for one of its biggest November gains on record. Bitcoin has reclaimed the $38,000 mark.
Also speaking on Tuesday, Chicago Fed President Goolsbee stated that this year's inflation slowdown is the largest in 71 years. His New York counterpart, Williams, called the decline encouraging.
In November, consumer confidence in the United States increased for the first time in four months, aided by more optimistic views on the labour market outlook. According to seasonally adjusted data from S&P CoreLogic Case-Shiller, home prices have reached a new high.
