UBS sees no Fed rate cuts in 2024, expects hawkish message from June meeting

UBS expects the Federal Reserve will not begin cutting interest rates in 2024 and anticipates a hawkish signal from the June policy meeting. The bank bases its view on stickier-than-expected inflation and a resilient labor market. That outlook reinforces market pricing for higher rates for longer and, in UBS’s view, could lift U.S. Treasury yields and support the dollar. UBS also said this would weigh on U.S. equity valuations, especially rate-sensitive growth stocks and broad market indexes.