Federal Funds Rate and ECB Deposit Rate Unlike the recent past, when inflation was high and interest rates were near zero, the Fed and ECB now have greater flexibility to cut rates if economic conditions worsen. Image: Deutsche Bank
Market-Implied Fed Funds Rate and 2-Year U.S. Inflation Swap Current market pricing of Fed rate cuts indicates a pivot from inflation worries to growth concerns, suggesting investors expect the Fed to prioritize economic stability over aggressive inflation control. Image: Deutsche Bank
Fed Balance Sheet Goldman Sachs predicts the Fed will slow its balance sheet reduction in June 2025 and end quantitative tightening by September, which could influence market liquidity and interest rates. Image: Goldman Sachs Global Investment Research
Fed Balance Sheet The ongoing reduction of the Fed’s balance sheet is expected to reduce bank reserves. This reduction may lead to higher inflation, increased real yields, and a steeper yield curve. Image: TS Lombard
Global Equities Around Fed Cut With And Without Recession Strong performance in global equities is common after the Fed’s initial rate cut, particularly when the economy remains recession-free for the subsequent 12 months. Image: Goldman Sachs Global Investment Research
Fed Funds Rate Goldman Sachs expects the Fed to implement two 25 basis point rate cuts in 2025, with an additional cut projected for 2026. How will the Fed navigate potential increases in trade tariffs under the Trump administration? Image: Goldman Sachs Global Investment Research
Fed Funds Futures Markets are still pricing in Fed rate cuts for 2025, but expectations have been scaled back due to persistent inflation concerns. Image: Deutsche Bank
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
Federal Debt Outstanding % GDP and Federal Interest Payments % GDP Recent interest rate cuts are easing federal interest expenses but raise concerns about long-term fiscal sustainability, as interest payments are expected to increase significantly in the future. Image: TS Lombard
Implied Fed Funds Target Rate The Fed has revised its 2025 projections, now anticipating only two rate cuts instead of four, with future reductions dependent on the progress made in managing inflation. Image: Bloomberg