Thu 15 Feb 2024 - 12:30 GMT

Markets have entered 2024 expecting many good things this year: US inflation returning to target, significant Fed rates cuts, a soft economic landing and S&P EPS growth accelerating at a double-digit pace

Any one of these forecasts could be correct. Perhaps two. But it’s almost impossible to see that all could be correct at the same time

Which market expectations is wrong will depend in part on the cycle: whether the now-consensus soft-landing eventuates, or whether the still-live risk of a hard landing unfolds

Rate markets will face the biggest adjustment in the soft landing scenario. US 10 year rates are not likely to be falling below 4% in a soft landing, they are likely to be pushing through 5%.