Interest Rates – U.S. Federal Funds Rate Expectations

Interest Rates – U.S. Federal Funds Rate Expectations BofA expects a 3.5-3.75% terminal rate in this cutting cycle, up 50bp from their previous forecast. This suggests a need to tighten monetary policy to control inflation and maintain economic balance. Image: BofA Global Research

All Money Market Funds Total Net Assets

All Money Market Funds Total Net Assets Despite the U.S. equity market’s upward trend since its 2022 low, investors still have a strong preference for cash. This is evidenced by the recent achievement of another record high of 6.111 trillion in money market funds. Image: BofA Global Research

Money Market Fund Assets vs. Fed Funds Target Rate

Money Market Fund Assets vs. Fed Funds Target Rate Money market funds often experience outflows 12 months after the initial rate cut. This occurs as investors reallocate their investments and adjust their risk exposure in response to fluctuations in interest rates and market conditions. Image: BofA Global Fund Manager Survey

Cumulative Annual Flows to IG Bond Funds

Cumulative Annual Flows to IG Bond Funds Investment-Grade (IG) corporate bond funds have experienced a surge in investor interest and confidence this year, resulting in robust inflows into this asset class. Image: BofA Global Investment Strategy

Interest Rates – Fed Funds Rate

Interest Rates – Fed Funds Rate Goldman Sachs now expects the Fed to implement three rate cuts in 2024, down from its earlier projection of four rate cuts, in response to elevated inflation data and evolving economic conditions. Image: Goldman Sachs Global Investment Research

Sentiment/VIX Composite vs. Fed Funds

Sentiment/VIX Composite vs. Fed Funds During a rate hiking campaign, bullish sentiment tends to increase initially, but ultimately ends badly. Image: Real Investment Advice

Market-Implied Path of the Fed Funds Rate

Market-Implied Change in Fed Funds Rate The market has significantly reduced its pricing of Fed rate cuts, indicating a change in expectations regarding future monetary policy. Image: Goldman Sachs Global Investment Research

Federal Funds Target Rate

Federal Funds Target Rate The Federal Reserve has historically made decisions independent of the election cycle, as the Fed’s decisions are primarily driven by economic indicators and the dual mandate. Image: Deutsche Bank

U.S. Fed Funds Target Rate

U.S. Fed Funds Target Rate Historically, there have been many instances where interest rate cuts have coincided with significant financial events and have had an impact on the U.S. stock market and the broader economy. Image: BofA Global Investment Strategy