Fed Pivot Dreams Get Ghosted: Citi Pushes Rate Cut Forecast to September While Dimon Warns of Iran War Inflation Scars

The US-Iran conflict continues to rain on the Fed's parade, with Wall Street now betting on rate cuts later than previously expected—or perhaps not at all this year. It's giving "waiting for Godot" energy, except the play is about interest rates and the existential dread is about your mortgage payments.

Citi has officially moved its forecast for the Fed's first rate cut from June to September, citing increased inflation risks stemming from the geopolitical turmoil. The bank isn't alone in hitting the snooze button on rate cut expectations. Basically, everyone's walking back to their desks after getting coffee and pretending they didn't just see the Fed pivoting in the distance.

Jamie Dimon didn't hold back in his annual shareholder letter, laying out a rather grim scenario. According to the JPMorgan CEO, markets have essentially priced out any chance of Fed rate cuts in 2024. The Iran conflict's impact on energy and commodity markets could keep inflation sticky—and potentially make it permanent. Dimon really said "btw, we're all going to the matrix" and the market just shrugged.

Translation: higher-for-longer might become higher-for-even-longer. For those keeping score at home, that's the financial equivalent of your Wi-Fi cutting out right before the season finale—painful, unnecessary, and somehow your problem to solve.

CME FEDWatch data shows traders aren't expecting any drama in the near term. April odds stand at 99.5% for rates staying put, with a mere 0.5% chance of a hike. By June, there's a slightly more optimistic 4.1% probability of a cut—but let's not get ahead of ourselves. The market is basically holding its breath while pretending it wasn't even planning to exhale anyway.

The market's message is clear: patience is a virtue, and the Fed's pivot is still very much TBD. So buckle up, degens—2024 is looking like the year we all become very good at waiting.