2023 proved an interesting year for the eurozone economy – the first half being marked by remarkable resilience, and the lack of a much-anticipated energy-induced recession; the second half being dominated by rapid disinflation, albeit at the cost of stagnant (at best) economic growth. The year ahead is likely to see more of what has been seen in the final six months of 2023, as momentum continues to wane, and output falls further, while inflation returns back to 2%. This, in turn, leads to the risk that the ECB cut significantly sooner than their G10 peers.

The US economy surprised sharply to the upside in 2023, comfortably avoiding the recession that many had called for, as a near-immaculate disinflationary process continued, with most areas of the economy taking the Fed’s most rapid tightening campaign since the ‘80s in stride. 2024, however, is likely to be a bumpier road stateside, amid early signs of momentum beginning to wane, and the labour market beginning to soften.

The table can offer a guide as to ‘what’s priced in’, and quantifies expectations expressed in the tradeable interest rate or interest rate swaps markets.