The "market" is not expecting 6 rate cuts in 2024.

Plain & simple.

While the CME Fed Watch Tool is, it's repeatedly been wrong at forecasting medium-term policy decisions.

So what's the solution and my justification for why 6 cuts aren't priced in for 2024? The 1Y Treasury yield!

Current fed funds is 5.33% and #US01Y is 4.9%.

🟢 EFFR = 5.33%

🔵 US01Y = 4.9%

That's a spread of -0.43%, less than the equivalent of two rate cuts over the next 12 months. If the market was actually priced for 6 rate cuts in 2024, the 1Y Treasury yield would be trading somewhere around 3.83%.

Read that again, it's extremely important.

As I've said time & time again, don't listen to futures markets, listen to what actual investors are doing right now in the bond market.

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