Search Results for: Fed rate cut

The S&P 500’s Drawdown and The Target Fed Funds Rate Fed rate cuts have generally been associated with recessions and drawdowns. Image: Bianco Research

The Market is Almost Wrong about What the Fed Will Do Actually, the Fed decides when to raise rates. But the market decides when to cut rates: “Markets have accurately priced in cuts before easing cycles begin.” Keep in mind that rate cut expectations are highly predictive six months in advance. You may also like “Fed Policy…

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…

Money Market Fund Assets After a Fed rate cut, U.S. money market funds usually see outflows within 12 months as investors realign their portfolios and manage risk in response to shifting interest rates and market conditions. Image: BofA Global Investment Strategy

U.S. 10-Year Treasury Yield – Daily Chart Factors such as easing inflation, anticipated Fed rate cuts, and moderate economic growth create a potential scenario for the U.S. 10-year Treasury yield to decline further by the end of the year. Image: BofA Global Research

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