Markets started the year in confident mood, betting that the US Federal Reserve would take the lead on interest rate cuts, with as many as six cuts in 2024. Those hopes have since faded and forecasts of a first cut in June are looking more uncertain. 

The popularity of passive investment funds, typically exchange listed index trackers, has grown steadily over the past decades. At $13.3 trillion, the total value of US passive funds at the end of 2023 topped the value of active funds for the first time.

Key central banks suggested that rates would be cut this year and appeared less concerned about the possibility that inflation would rebound. The US Federal Reserve (Fed) kept rates on hold at its March meeting and maintained its guidance for three 25 bps rate cuts in 2024, with financial markets now readjusting to the Fed’s own projections.

The Swiss National Bank (SNB) became the first major central bank to reduce interest rates this cycle. The SNB reduced rates by 25 basis points (bps) to 1.5%, its first cut in nine years, after Swiss inflation fell to 1.2% in February, marking the ninth consecutive month that prices have been within the 0-2% target range.

Many words have been written about the transformative potential of the implementation of generative artificial intelligence (gen AI) across the industries and nations of the globe. 

The US House of Representatives has approved a bill to ban TikTok from US app stores, unless its Chinese parent ByteDance agrees to dispose of the app. Existing users would be excluded from future updates, meaning that TikTok would eventually become obsolete in the US. 

‘Fear of missing out’ has been a major catalyst driving markets higher in recent months. As we approach the end of the first quarter of 2024, we consider where that leaves the outlook for asset prices.

The latest headline inflation rates have slowed, but risks remain. US average hourly earnings ticked up at the beginning of the year, and job growth was far stronger than expected, with recent data also revised higher.

Hopes faded for interest rate cuts in March. While the US Federal Reserve and European Central Bank indicated that later rate reductions were possible, they stressed it was too early to consider such a move.