Fee cuts are actually the expectation as fed stability sheet grows

Fast Take

• The outlook from markets has fully modified up to now few weeks because of banking failures within the US and EU.
• The market is now pricing in no extra fee hikes however substantial cuts, ending 2023 round 3.75-4%.
• 4 cuts are priced into the remainder of the yr, whereas the market suggests a higher than 90% probability the Fed is completed elevating charges.
• The fed stability sheet has grown for the previous two consecutive weeks; roughly $100 billion was added to the stability sheet this week.
• Whereas two-thirds of quantitative tightening have been undone in a matter of weeks.
• That is the third largest p.c change to the fed stability sheet, solely being crushed by covid and 2008.

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