After the December FOMC meeting, it is now widely accepted that Fed chair Jerome Powell is setting the ground for aggressive easing driving a huge shift in expected interest rate cuts.... even if it is not widely accepted why Powell made the determination to pivot, considering just two weeks earlier he vowed that it was "premature" to speculate on rate cuts...
In any case, as Alpine Macro shows, the persistent upward shift in the Fed funds futures curve over the past 12 months has reversed and as a result, a steady stream of Fed rate cuts, totaling 156 bps, is now embedded in these futures prices over the next year (similar to the market erroneously frontrunning a bevy of rate cuts last year).
