Fed Funds Rate and S&P 500 TTM EPS Growth Strong EPS growth, combined with Fed rate cuts, often fuels equities by reducing funding costs, boosting investment and sustaining earnings momentum—the classic drivers of bull markets. Image: TS Lombard
Fed Funds Rate By the end of 2026, Goldman Sachs anticipates four 25-basis-point cuts and expects the Fed to loosen monetary policy more than markets foresee, driven by worries about weaker employment growth and inflation dynamics. Image: Goldman Sachs Global Investment Research
U.S. 2-Year Treasury Yield vs. Fed Funds The current 2-year U.S. Treasury yield, which is below the fed funds rate, signals that monetary policy is restrictive. It also implies the Fed is about 80 basis points behind the curve in cutting rates. Image: Real Investment Advice
Fed Funds Rate Scenario Analysis In its baseline scenario, Goldman Sachs forecasts that the Fed will cut interest rates from 4.3% to 3.1% by the end of 2026. Image: Goldman Sachs Global Investment Research
U.S. Money Market Fund Assets vs. Federal Funds Effective Rate U.S. money market funds typically experience asset inflows during rate hikes but see outflows approximately 12 months after the Fed initiates rate cuts. Image: Real Investment Advice
Aggregate Financial Asset Allocation Among Households, Mutual Funds, Pension Funds, and Foreign Investors Investor allocation to equities has reached an all-time high, driven by retail enthusiasm and strong performance. However, rising valuations and concentrated leadership call for careful risk management. Image: Goldman Sachs Global Investment Research
Volatility Control Funds Estimated Equity Allocation Vol-control funds have near-record equity exposure by historical standards, sitting at the 97th percentile, which reflects strong confidence in the equity market risk environment. Image: Deutsche Bank Asset Allocation
S&P 500 – Hedge Funds vs. Retail Investors The contrast between hedge funds taking short positions and retail investors being long is often seen as a warning of potential equity market weakness over the next one to three months. Image: Bloomberg
Two-Year Rolling Change in the Fed Funds Rate Current rate cut expectations, as priced in by fed funds futures, are consistent with a recession scenario. However, market risk indicators and recent Fed communications suggest this may overestimate the pace of Fed rate cuts. Image: Deutsche Bank
Fed Cuts – Implied by Fed Funds Futures Fewer Fed rate cuts are expected in 2025, but chances of greater easing in 2026 have risen. This reflects caution amid inflation and policy risks, and leaves room for stronger monetary support if economic conditions worsen. Image: Fundstrat Global Advisors, LLC
Cumulative Flows in All Bitcoin Funds and Gold ETF Holdings The past month has seen a clear preference for Bitcoin over gold among investors, driven by a shift toward riskier assets, robust technical performance, and accelerating ETF inflows into Bitcoin. Image: Goldman Sachs Global Investment Research