They note that: “Recent inflation data have been an encouraging surprise even to our optimistic expectations, and our forecast path for year-on-year core PCE inflation has fallen somewhat as a result. .. We are therefore pulling our forecast of the first cut forward to Q3 2024”.
As a reminder, markets have already priced in the first rate cut for May next year as of the latest pricing. But after the US jobs report last week, traders have scaled back on overall rate cuts for next year and are seeing around 109 bps worth of rate cuts in 2024. It was roughly 115-125 bps some time last week before the non-farm payrolls.