U.S. Breakeven Inflation Rates vs. Oil U.S. breakeven inflation rates closely track oil prices, creating a complex challenge for the Federal Reserve as it navigates potential deflationary pressures in the coming months. Image: Real Investment Advice
U.S. Fed Funds Target Rate While “panic rate cuts” have historically been associated with negative market outcomes, the current context suggests that Wall Street may be embracing these cuts as necessary adjustments rather than signs of economic distress. Image: BofA Global Investment Strategy
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
NFIB Small Business Availability Loans vs. U.S. Initial Jobless Claims When interest rates are high, weak credit conditions can greatly affect the economy, potentially resulting in increased unemployment. Image: BofA Global Investment Strategy
U.S. 10Y-2Y Yield Curve and Recessions When a recession is avoided, an un-inversion in the 2s10s U.S. Treasury yield curve may suggest a favorable outlook for U.S. stocks. Image: Goldman Sachs Global Investment Research
What Do You Think Is Currently the Most Crowded Trade? For FMS investors, the “Long Magnificent Seven” trade continues to be the most crowded, largely attributed to the impressive performance and market leadership of these tech stocks. Image: BofA Global Fund Manager Survey
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
FMS Net % Expecting Stronger Economy vs. S&P 500 FMS investors remain pessimistic, anticipating a weak global economy over the next 12 months, resulting in a widening gap between their macroeconomic views and the performance of U.S. equities. Image: BofA Global Fund Manager Survey
When Will the U.S. Economy Go into Recession? The majority of FMS investors do not currently expect a U.S. recession in the next 18 months, while only 8% foresee one in the second half of 2024 and 35% predict a recession in 2025. Image: BofA Global Fund Manager Survey
2-Year U.S. Treasury Yield – Fed Funds Rate The current spread between the 2-year U.S. Treasury yield and the federal funds rate suggests that the bond market perceives the Federal Reserve’s monetary policy as tight. Image: Morgan Stanley Wealth Management