The key event this week will be Fed as the FOMC concludes its final meeting of the year on Wednesday. We expect the Fed to cut rates by 25bp at the 18th December meeting, completing the 100bp re-calibration indicated in the September dot plot. However, the meeting statement, Summary of Economic Projections (SEP), and Chair Powell's press conference will likely send a consistent signal that the Fed is set to slow the pace of rate cuts in 2025. Next year, the median dot is likely to show three additional rate cuts, though we expect the skew to be towards less easing. Finally, the long-run dot will likely continue its upward migration, rising to 3.1%. Our baseline remains that a skip in early 2025 could turn into an extended pause, with the Fed having limited scope for additional easing next year. We expect only 2 cuts of 25 bps each in CY25. In macro data in US, we expect the core PCE for Nov'24 to come at .13% MoM translating to 2.8% YoY. PMIs in US could come a tad stronger & US retail sales around 0.4% MoM in both headline & control figures. Eurozone PMIs might further move down primarily being driven by Germany. UK retail sales and CPI might come stronger than consensus figure but BOE is expected to remain on hold in it's 19th Dec meeting. BOJ too is likely to remain on hold in it's 19th Dec meeting. We expect BOJ to hike by 25 bps in it's 24th Jan meeting which the variables of Shunto negotiations as well as new US admin policies are clear.
