S&P 500 Index Performance After The First Fed Rate Hike Historically, the S&P 500 has weathered the Fed’s first rate hike better than investors might expect. Following an initial 25 bp move, the index often stumbles early but, in every cycle since 1990, has been higher a year later. Image: Carson Investment Research
Interest Rates – Market Pricing for the Number of Fed Rate Cuts Markets have sharply repriced the Fed path. Investors shouldn’t see “no rate cuts before 2027”, but they should recognize that the hurdle for 2026 easing has risen significantly. Cuts aren’t off the table, just harder to justify now. Image: The Daily Shot
S&P 500 Performance Around First Fed Rate Cut When the economy stays firm, Fed rate cuts have a history of boosting stocks and the S&P 500’s current run is no exception. Image: TS Lombard
Amount of Fed Rate Cuts Priced by End of Year Traders are sticking to expectations for two 25-basis-point cuts in 2026, even as Fed projections reveal deep splits. The easing drive has lost some steam, but the cycle isn’t done yet. Image: Bloomberg
Median U.S. 10-Year Treasury Yield Performance in Fed Rate Cuts Cycles Fed rate cuts usually pull short-term yields lower, but long Treasury bonds don’t always fall in line. Inflation expectations, shifting bets on future policy, or a flood of new debt can just as easily push them higher. Image: Deutsche Bank
Market Pricing of Fed Rate Cuts Traders are increasingly confident the Fed will cut rates at the December 10, 2025 FOMC meeting, pricing in an 86% chance of a quarter-point move and just a 23% likelihood of another cut in January 2026. Image: Deutsche Bank
Dow Jones Industrial Average Around First Fed Rate Cut In the absence of recession, U.S. equities typically perform strongly in the year after the Fed’s first rate cut, with cyclical sectors benefiting most from improved financial conditions and economic expansion. Image: Ned Davis Research
Fed Cuts – Implied by Fed Funds Futures Fewer Fed rate cuts are expected in 2025, but chances of greater easing in 2026 have risen. This reflects caution amid inflation and policy risks, and leaves room for stronger monetary support if economic conditions worsen. Image: Fundstrat Global Advisors, LLC
Energy Prices vs. Fed Rate Cuts Energy prices have historically risen after the Federal Reserve begins cutting interest rates. Image: MarketDesk Research
Probability of Fed Rate Cut After the CPI data release, traders now estimate an 82.5% chance of a 25 basis point rate cut at the FOMC meeting on December 18, 2024. Image: CME GRoup
Number of Trading Days Since Last Fed Rate Cut The Fed’s recent decision to cut interest rates for the first time in four years, in response to changing economic conditions, marks the second-longest wait for such a reduction in history. Image: Morgan Stanley Wealth Management