December has marked the big Fed pivot to lower rates. It may not happen immediately, but the direction is clear. We have peaked in rates as of this fed meeting and the direction is lower. Whether because we beat inflation, or there is a need to lower rates to support the economy, the answer is still the same. The Fed, through the dot plot forecasts, is expected rates to decline by 75 bps in 2024 with more declines in 2025 and 2026 to get back to a neutral rate of about 2.5%. There is no guarantee that this will occur since the SEP forecasts are just forecasts from different Fed officials. Nevertheless, by this measure, we can expect a strong headwind for stocks in the new year.
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