S&P 500 Pre and Post Fed Rate Cuts Historically, U.S. stocks have demonstrated robust performance in the two years following the start of a Fed rate cut cycle, particularly during periods without recession. Image: Goldman Sachs Global Investment Research
Energy Prices vs. Fed Rate Cuts Energy prices have historically risen after the Federal Reserve begins cutting interest rates. Image: MarketDesk Research
Average U.S. 10-Year Treasury Yield Performance in Fed Rate Cut Cycles Since 1966, the current Fed easing cycle has resulted in the second-worst performance of 10-year U.S. Treasury bonds. The only period with worse performance was in 1981, during Chairman Paul Volcker’s aggressive measures to combat inflation. Image: Deutsche Bank
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
Market Pricing of Fed Rate Cuts BofA expects the Fed to cut another 75bp this year, consistent with market pricing, particularly in light of recent economic conditions and the Fed’s recent decision to cut rates by 50bp. Image: BofA Global Research
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
Fed Rate Cuts Goldman Sachs forecasts a series of 25bp interest rate cuts through mid-2025, aimed at supporting economic growth amid fluctuating inflation rates. Image: Goldman Sachs Global Investment Research
Factor Performance Prior and After the First Fed Rate Cut Historically, the first rate cuts by the Federal Reserve during easing cycles have tended to favor Growth over Value, Small over Large, and Bonds over Stocks. Image: BofA US Equity & Quant Strategy
Small-Cap Stocks Relative Performance vs. Large-Cap Stocks Around the First Fed Rate Cut Small-caps often outperform large-caps in the 6 months following the first Fed rate cut, driven by lower interest rates and a market preference for smaller companies during economic recoveries. Image: BofA US Equity & Quant Strategy
Median Index Returns Following First Fed Rate Cut Historically, midcaps have outperformed the S&P 500 and the Russell 2000 in the three and twelve months following the initial Federal Reserve rate cut. Image: Goldman Sachs Global Investment Research
10-Year/2-Year Treasury Yield Curve Around First Fed Rate Cuts The U.S. yield curve typically steepens once the prospect of interest rate cuts by the Fed becomes more imminent, rather than when the Fed actually stops hiking rates. Image: Goldman Sachs Global Investment Research