Money Market Fund Assets vs. Fed Funds Target Rate Money market funds often experience outflows 12 months after the initial rate cut. This occurs as investors reallocate their investments and adjust their risk exposure in response to fluctuations in interest rates and market conditions. Image: BofA Global Fund Manager Survey
Interest Rates – Fed Funds Rate Goldman Sachs now expects the Fed to implement three rate cuts in 2024, down from its earlier projection of four rate cuts, in response to elevated inflation data and evolving economic conditions. Image: Goldman Sachs Global Investment Research
Sentiment/VIX Composite vs. Fed Funds During a rate hiking campaign, bullish sentiment tends to increase initially, but ultimately ends badly. Image: Real Investment Advice
U.S. Fed Funds Target Rate Historically, there have been many instances where interest rate cuts have coincided with significant financial events and have had an impact on the U.S. stock market and the broader economy. Image: BofA Global Investment Strategy
Fed Funds Rate – Target Probabilities at the Fed’s FOMC Meeting Traders currently see a 14.5% probability of a 25-bps rate cut at the FOMC meeting on January 31, 2024. Image: CME Group
Fed Funds Rate and Dow Jones Index In the same way as it was in the 1970s, it’s all about the Federal Reserve. Image: BofA Global Investment Strategy
U.S. Core CPI Minus Unemployement Rate % vs. Fed Funds Rate The Fed rarely cuts rates when core CPI exceeds the unemployment rate, reflecting the central bank’s concern about potential inflationary pressures in the economy and its emphasis on price stability. Image: BofA Global Investment Strategy
Effective Fed Funds Rate and S&P 500 Index Return vs. 10-Year U.S. Treasury Bond Return Is 2024 poised to be the year for bonds, given that the median relative performance spread between stocks and bonds in previous Fed cutting cycles has been 25%? Image: Morgan Stanley Wealth Management
Fed Funds Rate vs. U.S. Job Openings (JOLTS) Declining wage growth and employment would allow the Fed to make substantial cuts in interest rates. Image: BofA Global Investment Strategy
Fed Funds Target Rate Goldman Sachs predicts that by the end of 2024, the federal funds rate will reach 5.1%, which differs significantly from the expectations of the futures market.. Image: Goldman Sachs Global Investment Research