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. It highlights the asymmetric nature of market reactions to economic data, where strong data may lead to a longer hiking cycle, but weak data could prompt more cuts. The discussion also covers the US yield curve, predicting significant steepening driven by various scenarios, including inflation risks and regional banking issues. The analysis suggests that the yield curve could benefit from both bullish and bearish market conditions.

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

• Rate cuts will not happen this year.

• Rate cuts will happen in Q3 of 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 ability to price in rate cuts?

• The market cannot price in rate cuts.

• The market can only price in rate hikes.

• The market can price in more and earlier rate cuts.

• The market is indifferent to rate cuts.

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

• A single strong data point.

• No data is required.

• A long string of strong data.

• A few weak data points.

What is the speaker's view on the US yield curve?

• The curve will flatten.

• The curve will steepen significantly.

• The curve will invert.

• The curve will remain unchanged.

How does the speaker describe the trade involving the US yield curve?

• It is an elegant trade that works in both bull and bear scenarios.

• It only works in bear scenarios.

• It only works in bull scenarios.

• It is a risky trade with no clear outcome.