Jan 2020 Fed funds futures are currently pricing in a lower EFFR than today's one, ie pricing in a chance of a rate cut in 2019...
The market is pricing 2.325% vs current EFFR of 2.4%...
Meanwhile, the US labour market is blistering and corporate margins are near all-time highs.
Perhaps the last 3 months were just about retail investors getting into a twist. Or perhaps its just post-QE valuations resetting lower in jolts. Or markets fearing a fall into the deflationary recessionary gap as the US transitions between a QE/ credit led economic cycle and a wage/ investment/ inflation cycle going forwards.
The US credit cycle is also still very strong.
As per H8 survey from end November to the 26th December bank credit grew ~11% of GDP and bank total assets (BTFD!) grew 17% of GDP annualised. That was after a strong October and November as well.
The magic elixir of a Trillion $ late cycle deficit and still loose Fed