'No Cuts In 2024'-Trade Gathers Steam Ahead Of Fed Meeting; Nomura Warns Big VIXperation 'Unclench' Matters

Tomorrow's Fed meetingb has seemingly now become quite an event in the eyes of market participants, with the debate now as to whether a hawkish revision to their Core PCE inflation forecast for 2024 off the back of recently firming data will then be accompanied by an upward revision to the Fed dot plot - i.e. just two 25bps cuts this year, moving down from the current pricing of three cuts in the dot plot... as mind-you, it would only require two voter dots to move their projected cuts lower in order to shift the median...

As the chart above shows, since the last Dot-Plot, the market has shifted hawkishly back from its uber-dovish stance. The market is now pricing in less than 3 rate-cuts in 2024, from almost 7 rate-cuts priced-in January...