5 Things You Need to Know to Start Your Year

Good morning. We've taken a pause from our holidays to compile a rundown of our year-ahead pieces for key assets. All the best for 2024 — Si [View in browser]( [Bloomberg]( Good morning. We've taken a pause from our holidays to compile a rundown of our year-ahead pieces for key assets. All the best for 2024 — [Simon Kennedy.]( What happened First a reminder of what happened in 2023. Stocks were supposed to slump and bonds rally as the Federal Reserve drove the US into recession to defeat inflation, according to forecasts made on Wall Street a year ago. They also reckoned buying Chinese stocks would pay off. That’s not how it played out for the most part, as Bloomberg’s [Big Take]( details today. Strategists at Goldman Sachs and Bank of America were among those to get parts of the year wrong. Now, let’s look at predictions for 2024... Dollar bears A weaker [dollar]( is the expectation for 2024 of most analysts surveyed by Bloomberg amid forecasts that the Fed will lead the way among rich peers in cutting interest rates and that a soft landing in the US's economy will encourage investors to seek risk away from its shores. But strategists at JPMorgan Chase and HSBC are among those who reckon the greenback could still strengthen because the rest of the world will end up needing to reduce rates more to aid their economies. Currency-watchers are more confident in predicting the [Japanese yen]( will rise as they anticipate the Bank of Japan will finally raise rates. Bond bulls The Fed's December change in tack towards easier monetary policy in 2024 forced bond strategists to [rewrite their forecasts]( to show US debt doing even better next year. The median forecast for the 10-year Treasury yield is now for it to fall to 3.98% this time next year. But there is still some dissent. TD Securities thinks yields have scope to hit 3% a year from now following 200 basis points of Fed rate cuts beginning in May. Goldman Sachs and Barclays Capital, while capitulating on their views that rate cuts were unlikely before the fourth quarter, forecast yields to end 2024 at 4% and 4.35% respectively. In the [hunt for returns](, some traders are looking to Austria's century bonds and the debt of supra-nationals among other non-traditional destinations. Steady stocks No fireworks for next year. That’s the [consensus view]( for equity markets as investors have already scooped up stocks on expectations of a soft economic landing and a flurry of interest rate cuts for 2024. Record highs have been broken on a number of benchmarks in the last stretch of the year, confounding bearish forecasts set by the likes of Morgan Stanley and JPMorgan. The biggest focus for 2024 is whether Big Tech can extend its meteoric rise following its best year since the dotcom bubble, if the rally broadens up to include 2023 laggards such as [Chinese equities](, or if the long-awaited recession finally hits and send stocks plunging. Some who got this year right see [more gains]( ahead. Coming up… As is clear from each of the above sections, central banks will be key source of news in 2024. Economists at Bank of America reckon there will be more than 150 rate cuts globally over the next 12 months, which would be the first time since the pandemic year of 2020 in which reductions outpaced hikes. It's also going to be a [big year for elections](. Bloomberg Economics estimates voters in economies accounting for 44% of global output will head to the ballot box, including those in the US and India. The wars in Ukraine and Gaza add to the geopolitical risks. On the fun front, Paris will host the Summer Olympics. What We’ve Been Reading Here’s some of the Bloomberg terminal’s most-read stories of 2023. - Goldman trader steps down after being [paid $100 million]( since 2020 - SVB races to prevent a [bank run]( - JPMorgan is [in a fight]( over client’s lost $50 million - Wall Street traders go all-in on [great monetary pivot]( - [Bankman-Fried]( associates flip as FTX founder lands in New York - Rookie traders earn $400,000 in Sydney’s [unlikely markets hub]( And finally, here's what I’m interested in this coming year 2024 could be the year Jay follows Tay. Taylor Swift was just named Time Magazine's "Person of the Year,” in part because of how she helped propel the US economy and disrupted industries from music and cinema to American football and airlines. Bloomberg had weeks earlier [declared her a billionaire]( and Bloomberg Economics calculated her 53 US concerts this year [added $4.3 billion]( to the country's gross domestic product. Taylor Swift Photographer: Matt Winkelmeyer/Getty Images Lost in the cheers of the Swifties was that Federal Reserve Chairman Jerome Powell made the shortlist for a third time, having previously reached the finals in 2019 and 2020. Powell "played a key role managing high inflation in the US, trying to architect the so-called 'soft landing' of reducing inflation by raising interest rates without causing a recession -- a goal felt in the wallets of Americans and economies across the world," the magazine said. 2024 could prove fourth time lucky for the central banker. But a lot needs to go right. Having ended 2023 pivoting towards easier monetary policy, he and his fellow central bankers will have to decide when to cut interest rates and then how deeply. Wait too long and that fabled soft landing could turn hard. Cut too soon, or by too much, and inflation could reaccelerate. The presidential election will only thicken the fog in which policymakers must act. Markets seem to be betting Powell's Fed can indeed avert recession and control consumer prices in 2024. Their fate is closely twinned with the central bank's success, just as it was in 2009 when Ben S. Bernanke was honored by Time for helming the Fed during the financial crisis. If Powell does indeed pose for the magazine cover a year from now, it will likely have been a good year for markets too. Simon Kennedy is Bloomberg’s Senior Executive Editor for Macro Markets. Follow him on X [@simonjkennedy]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Tell us what you want to see in the Five Things newsletter! Please [take our quick survey here.]( [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Five Things to Start Your Day: Americas Edition newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](