Fed Won't Cut Rates Until Q1 Next Year, BNP's Tse Says

The video discusses the Federal Reserve's rate cut expectations, emphasizing that while no cuts are expected this year, market indicators suggest potential earlier cuts. The CPI data has influenced market pricing, creating an asymmetric situation where strong data is needed for a longer hiking cycle, but weak data could prompt more cuts. The discussion also covers the US yield curve, predicting significant steepening driven by different scenarios, including inflation risks and regional banking issues.

What is the base case scenario for the Federal Reserve's rate cuts according to the speaker?

• Rate cuts will happen in Q3 of this year.

• Rate cuts will not happen this year.

• Rate cuts will happen in Q4 of this year.

• Rate cuts will happen this year.

What does the speaker suggest about the market's potential reaction to quantitative indicators?

• Markets will ignore quantitative indicators.

• Markets will definitely follow the base case.

• Markets might price in earlier rate cuts.

• Markets will only react to qualitative data.

What is required for the markets to price in a longer hiking cycle?

• No change in data trends.

• A long string of strong data.

• Immediate rate cuts by the Fed.

• A few weak data prints.

What is the speaker's prediction for the US yield curve?

• It will steepen significantly.

• It will remain unchanged.

• It will invert completely.

• It will flatten significantly.

In what scenarios does the speaker believe the yield curve could steepen?

• Only when inflation is low.

• Only in bearish environments.

• Only in bullish environments.

• In both bullish and bearish environments.