Earnings – S&P 500 Trailing 12-Month Net Income Growth vs. Fed Funds Rate Deviation from Trend (Leading Indicator) The change in fed funds rate suggests an earnings recession. Image: Morgan Stanley Wealth Management
Flows – Cumulative Weekly Inflow to Passive Equity Funds Will flows into passive equity funds continue to rise? Image: BofA Global Investment Strategy
Yield Curve – Fed Funds Rate and 10-Year U.S. Treasury Yield Should investors expect the fed funds/10-year UST yield curve to invert? Image: Morgan Stanley Wealth Management
Federal Funds Rate and Core PCE Inflation Will the Fed hike rates above core PCE inflation? Image: Deutsche Bank
Fed Funds Rate Will the federal funds rate peak at 4%-4.25%? Image: BofA Global Fund Manager Survey
Fed Funds Rate YoY Less Real GDP Trailings 24-Months YoY Historically, the Fed’s tightening cycle tends to peak when the fed funds rate reaches the two-year trailing real GDP growth rate. Image: Morgan Stanley Wealth Management
U.S. 10Y-3M Yield Curve and Fed Funds Target Rate Historically, the Fed doesn’t pivot policy until a recession arrives and the 10Y-3M US Treasury yield curve inverts. Is it really different this time? Image: Morgan Stanley Wealth Management
Inflation – Fed Funds Rate Less Core PCE vs. Fed Funds Rate It seems unlikely that the Fed will pause before the federal funds rate rises above the core PCE rate. Image: Morgan Stanley Wealth Management
Fed Funds Rate and Forecasts BofA expects the Fed funds terminal rate to reach 3.25-3.50%. Image: BofA Global Research
S&P 500 Index Forward 12-Month EPS Growth and Fed Funds Rate Historically, Fed rate hikes tend to be a headwind to profits. Image: Morgan Stanley Wealth Management
U.S. 2-Year Treasury Yield vs. Fed Funds Historically, U.S. 2-year Treasury yields tend to lead Fed funds by 20 weeks. Image: Richardson Wealth