With constant talk regarding potential rate cuts, and the Federal Reserve leaving rates unchanged, analysts at UBS assessed what happens if the Fed doesn't cut, in a note this week.

The firm's risk-on positioning has been informed by the premise that if central banks are cutting rates into an environment already healthy for nominal growth, that would be a uniquely positive backdrop for stocks.

However, the Federal Reserve's potential interest rate cuts in 2024 have become a question of if, not when.

"Equity markets were able to digest the pricing out of interest rate cuts for much of this year because higher yields, in large part, reflected improving expectations around the growth outlook," said the bank.

"The pricing out of rate cuts is more a function of strong growth than stubbornly hot inflation," the bank states. "We think disinflation, while moving slowly, is still on track."

Even so, UBS believes that equity and credit markets should hold up well, even if the Fed does not cut rates – as long as rate hikes are not on the table. In addition, it is believed that the bar for further Fed tightening is high.