Flows into U.S. Equity ETFs and Mutual Funds Looks like U.S. equities hit the jackpot over the last month with $141 billion flooding in—who knew the stock market could gain such popularity? Image: Goldman Sachs Global Investment Research
Fed Funds Rate and Fed Funds Futures Deutsche Bank’s forecast for the federal funds rate is notably more hawkish compared to many mainstream projections. In light of the election results, the Fed may hold interest rates above 4% throughout 2025. Image: Deutsche Bank
Fed Funds vs. 2-Year U.S. Treasury Yield (Leading Indicator) The current 2-year U.S. Treasury yield, sitting below the fed funds rate, indicates that the Fed’s monetary policy is restrictive. Historically, the 2-year yield tends to lead the fed funds rate by approximately 20 weeks. Image: Bloomberg
Share of U.S. Equity Mutual Fund and ETF AUM Passive U.S. equity funds surpassed active ones in 2020. Investors prefer them due to their lower fees, potential tax benefits, and the belief that active fund managers cannot consistently outperform the market. Image: Goldman Sachs Global Investment Research
% of Large-Cap Mutual Funds Outperforming their Benchmarks A concerning 69% of large-cap mutual funds have underperformed their benchmarks year-to-date, disappointing investors seeking above-average returns. Image: Goldman Sachs Global Investment Research
Flows into Money Market Funds Investor interest in U.S. government money market funds continues to be strong, driven by their current attractive yields, high level of safety and liquidity. Image: Goldman Sachs Global Investment Research
Market-Implied Change in Fed Funds Rate Traders are anticipating a total of 75 bps in interest rate cuts by the Federal Reserve over the next 12 months. Image: Goldman Sachs Global Investment Research
Fed Funds Rate – Target Probabilities at the Fed’s FOMC Meeting In light of Fed chair recent comments, market expectations for a rate cut at the upcoming FOMC meeting on December 18, 2024, have shifted. Traders now estimate a 61.9% probability of a 25 basis point rate cut at this meeting. Image: CME Group
Interest Rates – Fed Funds Futures Curve After the Federal Reserve’s recent meeting, the slope of the fed funds futures curve has increased slightly, indicating a shift in market expectations regarding future interest rate movements. Image: The Daily Shot
Federal Funds Target Rate While the Fed has begun easing monetary policy, the current federal funds rate remains notably above their estimated neutral rate, with plans for further gradual reductions to bring it closer to neutral over time. Image: Goldman Sachs Global Investment Research
U.S. Money Market Fund Assets and Fed Funds Rate The current environment suggests that a substantial amount of capital is poised to flow back into equity markets, driven by expectations of favorable economic conditions and monetary policy adjustments. Image: Goldman Sachs Global Investment Research