Insights

Bond markets raise chance of disappointment as they price for aggressive rate cuts in 2024

8 December 2023

This week we saw more enthusiasm for government bonds as investors doubled down on the view that central banks will cut rates in 2024 and will cut them significantly. European government bonds led the rally following comments from several ECB members that appeared to confirm the view that the bank has finished hiking following the rapid slowdown in inflation. This was supported by lacklustre European economic growth. However, mixed signals on the strength of the US jobs market meant US government bonds gave back most of their gains.