Fed Rate Cut vs. ISM Manufacturing Index and ISM Non-Manufacturing Index Since 1997, when the ISM Manufacturing Index is below 50 and the ISM Non-Manufacturing Index is above 52, the Fed is less aggressive, with about 68bp of easing on average. Image: Goldman Sachs Global Investment Research
Fed Rate Cuts Priced In and Recession Insurance cuts or recessionary cuts? It usually doesn’t end well, when the bond market begins to price in more than three rate cuts over the next 6 months. Image: Societe Generale Cross Asset Research
U.S. Equities – One Year Return After a Fed Rate Cut The chart shows how U.S. equities have historically performed after a 25 bps and 50 bps Fed rate cut over the last 35 years. You may also like “First Fed Rate Cut.” Image: Ycharts
Russell 2000 Index/Russell 1000 Index Around First Fed Rate Cut: Recession vs. No Recession Another great chart suggesting no recession, when large caps outperform small caps, around first Fed rate cut. Image: Ned Davis Research
S&P 500 Consumer Discretionary / Industrials Around First Fed Rate Cut If consumer discretionary outperforms industrials after first Fed rate cut, then it could signal a recession. Image: Ned Davis Research
Earnings Revisions Strategy Outperforms Around First Fed Rate Cut Around first Fed rate cut, earnings revisions is the top factor out of 200 strategies. Image: Ned Davis Research
S&P 500 After Initial Fed Rate Cuts Outside Of Recession When the Fed cuts rates without a recession, the S&P 500 Index tends to go higher. Average gain since 1984: +11.1% six months later and 15.8% twelve months later. Image: LPL Research
Fed Rate Cuts Boost Consumer Spending The chart shows real PCE around first Fed rate cut: recession vs. no recession. Fed rate cuts are more effective during a recession. Image: Ned Davis Research
10-Year/2-Year Treasury Yield Curve Around First Fed Rate Cuts The chart shows that the 10-Year/2-Year Treasury yield curve usually steepens around the first Fed rate cut. Image: Ned Davis Research
S&P 500 Dividend Payers / Non-Payers Around First Fed Rate Cut The chart shows that S&P 500 dividend payers have outperformed non-payers around the first Fed rate cut and 12 months later, because they are more attractive than bonds. Image: Ned Davis Research