SVB – Quarterly Economic Report, 2Q 2024

The Federal Open Market Committee (FOMC) has decided to keep the fed funds rate unchanged for the fifth consecutive meeting, maintaining it at a range of 5.25% to 5.50%. The FOMC's focus is on achieving maximum employment and its 2% inflation target, with the timing of rate cuts in 2024 dependent on incoming data. Despite this, the Fed continues to anticipate three rate cuts of 25 basis points each by the end of 2024, with careful consideration of inflation metrics and financial stability. Global equities have performed well, with the S&P 500 reaching a record high and other indices also rising on the back of indications of potential rate cuts. The bond market's performance has been mixed, with shorter-duration strategies benefitting from reduced rate cut expectations in the first quarter of 2024. High-carry currencies, commodities, and cryptocurrencies have outperformed, as reflation assets such as bitcoin, gold, and natural gas bounce back from cycle lows due to the absence of expected rate hikes and the economy's resilience.