Fed Monetary Policy Rate Change over 6 Months Prices in (Futures) vs. Actual Actually, the Fed decides when to raise rates, but the market decides when to cut rates. This chart shows that rate expectations are highly predictive six months in advance. You may also like “Markets Have Accurately Priced in Cuts before Easing Cycles…
S&P 500 Performance Around Previous Fed Cuts This spreadsheet shows that the S&P 500 has performed well on average, around first Fed rate cut. Image: Barclays Research
Expected Fed Funds Rate as of June 1, 2019 Traders are pricing in two full cuts in the fed funds target before the end of 2019. Fed funds futures for January 2020 imply an expected rate of only 1.85%. Let’s hope the Fed gets the message from the market. You may also like “Markets Have…
Markets Have Accurately Priced in Cuts before Easing Cycles Begin Orange lines mark days when markets priced in a rate cut. In recent history, it occurs between 33 and 281 business days before fed cut. The average is 120 business days. So, the Fed’s rate cut could take place in September 2019. You may also…
ISABELNET Picture of the Day The S&P 500 dropped 2.08% this week due to concerns over Fed rate cuts and inflation risks under the new administration, but it remains positive for November. Have a Great Weekend Everyone! 😎
Real Estate Flows The longest streak of inflows into REITs since March 2022 highlights investor confidence in the long-term value and resilience of the real estate sector, driven by expectations of potential Fed rate cuts. Image: BofA Global Investment Strategy
Cross Asset Flows as a % of Assets Money market funds saw a significant outflow of $40 billion over the past week, as a Fed rate cut is now on the horizon. Image: Deutsche Bank Asset Allocation
Market – Current Pricing of Policy, Political and Macro Outcomes Investors are confidently predicting a 100% chance of a Fed rate cut on September 18, a 75% likelihood of Donald Trump winning the U.S. election on November 5, and a 68% probability of a soft landing within the next 12 months. Image: BofA Global Investment…
U.S. Money Market Fund Assets Following a Fed rate cut, U.S. money market funds typically experience outflows 12 months later as investors adjust their portfolios and manage risk in response to changing interest rates and market conditions. Image: Goldman Sachs Global Investment Research
Money Market Assets Under Management Following a Fed rate cut, money market funds typically experience outflows 12 months later as investors adapt portfolios and manage risk exposure in response to shifting interest rates and market conditions. Image: BofA Global Investment Strategy
U.S. ISM Services Prices Paid Index vs. U.S. CPI Inflation (Leading Indicator) The U.S. ISM Services Prices Paid Index tends to lead U.S. CPI inflation by 2 months. Are Fed rate cuts still likely in 2024? Image: Deutsche Bank