Macro Insights

December 2023 wrap-up: markets surge as the Fed validates hopes of a soft landing

10 January 2024

Author: Griffin Tory

As in recent months, monetary policy expectations were central to broader market moves in December. Sentiment was bolstered early in the month as the US Consumer Price Index showed inflation pressures continuing to ease. Shortly after, at the December Federal Open Market Committee (FOMC) meeting, officials revised their end-2024 interest rate projections significantly lower, implying a median of 75bps in interest rate cuts over the year. At the FOMC press conference, Chair Powell added to the dovish tone by expressing confidence that inflation would continue to fall, helped by recent supply-side gains in the economy. This served to validate market hopes of a so-called ‘soft landing’ scenario of falling inflation alongside no recession. Officials at the European Central Bank and Bank of England pushed back against the idea of imminent interest rate cuts, although markets remained confident that both central banks would ease policy materially in 2024. On the economic activity side, US growth remained robust, hovering close to trend at around 2%, whilst Europe continued to show signs of stagnation.  

Elsewhere in Asia, the Bank of Japan maintained its ultra-loose policy stance, citing doubt as to whether inflation was “sustainably and stably” at the 2% target. Meanwhile, the Chinese policymakers stepped up efforts to support the economy, with the central bank providing significant liquidity and municipal governments easing home-purchase restrictions. 

Against this backdrop, global equities and bonds rose in tandem, gaining +4.8%1 and +4.2%2 respectively, whilst the US dollar declined -2.4%3. Global commodities fell -2.7%4, but this conceals large disparities among sub-components, with energy falling -6%5 amid concerns about weak oil demand and oversupply, whilst industrial metals were up 4%6 as market sentiment improved. 

Source: Bloomberg

About the Author

Griffin Tory

Griffin Tory is a Junior Economist working within the Macro Research team. Griffin joined Fulcrum in 2022 and prior to this, worked in the Investment Strategy Group at Vanguard. He graduated with an MPhil in Economics from the University of Cambridge in 2020.

1. Bloomberg Ticker: GDUEACWF Index

2. Bloomberg Ticker: LEGATRUU Index

3. Bloomberg Ticker: TWI USSP

4. Bloomberg Ticker: BCOMTR Index

5. Bloomberg Ticker: BCOMEN Index

6. Bloomberg Ticker: BCOMIN Index

This content is provided for informational purposes and is directed at professional clients as defined in Directive 2011/61/EU (AIFMD) and Directive 2014/65/EU (MiFID II) Annex II Section I or Section II or an investor with an equivalent status as defined by your local jurisdiction.  Fulcrum Asset Management LLP (“Fulcrum”) does not produce independent Investment Research and any content disseminated is not prepared in accordance with legal requirements designed to promote the independence of investment research and as such should be deemed as marketing communications.  This document is also considered to be a minor non-monetary (‘MNMB’) benefit under Directive 2014/65/EU on Markets in Financial Instruments Directive (‘MiFID II’) which transposed into UK domestic law under the Financial Services and Markets Act 2000 (as amended). Fulcrum defines MNMBs as documentation relating to a financial instrument or an investment service which is generic in nature and may be simultaneously made available to any investment firm wishing to receive it or to the general public. The following information may have been disseminated in conferences, seminars and other training events on the benefits and features of a specific financial instrument or an investment service provided by Fulcrum.Any views and opinions expressed are for informational and/or similarly educational purposes only and are a reflection of the author’s best judgment, based upon information available at the time obtained from sources believed to be reliable and providing information in good faith, but no responsibility is accepted for any errors or omissions. Charts and graphs provided herein are for illustrative purposes only. The information contained herein is only as current as of the date indicated, and may be superseded by subsequent market events or for other reasons. Some of the statements may be forward-looking statements or statements of future expectations based on the currently available information. Accordingly, such statements are subject to risks and uncertainties. For example, factors such as the development of macroeconomic conditions, future market conditions, unusual catastrophic loss events, changes in the capital markets and other circumstances may cause the actual events or results to be materially different from those anticipated by such statements. In no case whatsoever will Fulcrum be liable to anyone for any decision made or action taken in conjunction with the information and/or statements in this press release or for any related damages. Reproduction of this material in whole or in part is strictly prohibited without prior written permission of Fulcrum Copyright © Fulcrum Asset Management LLP 2024. All rights reserved.

FC386 100124

Share this article

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on email
Your privacy

Cookies are data files that are stored on your computer or other smart device by a website’s server. Each cookie is unique to your web browser. It will contain some anonymous information such as a unique identifier, website’s domain name, and some digits and numbers. Cookies are useful as they allow us to recognise a user’s device and its preferences in order to ensure that our website works properly. By continuing to use this website, you consent to the use of our cookies.


You can find out the different types of cookies used on our website in our Cookies and Data Privacy Policies.

Necessary cookies