Fed Monetary Policy Rate Change over 6 Months Prices in (Futures) vs. Actual Actually, the Fed decides when to raise rates, but the market decides when to cut rates. This chart shows that rate expectations are highly predictive six months in advance. You may also like “Markets Have Accurately Priced in Cuts before Easing Cycles…
Markets Have Accurately Priced in Cuts before Easing Cycles Begin Orange lines mark days when markets priced in a rate cut. In recent history, it occurs between 33 and 281 business days before fed cut. The average is 120 business days. So, the Fed’s rate cut could take place in September 2019. You may also…
U.S.: Market Odds of A Fourth Rate Cut The Fed may be inclined to press the pause button in the “mid-cycle” policy easing. Image: Oxford Economics
Central Banks Balance Sheet Despite years of monetary policy easing, central banks are still missing their inflation goals. Image: Financial Times
U.S. Dollar and Weak Global Growth This spreadsheet shows that Fed policy easing can weaken the U.S. dollar in times of weak global growth. Image: Goldman Sachs Global Investment Research
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
U.S. NonFarm Employment Annual Growth The YOY job growth rate of 1.1% is a warning sign, as similar levels have coincided with periods just before or during recessions since 1950, supporting the case for the Fed to consider easing monetary policy soon. Image: Paulsen Perspectives
Oil, 10 Year U.S. Treasury Yields and U.S. Dollar The increasing cohesion in recent years between oil prices, 10-year U.S. Treasury yields, and the U.S. dollar reflects deeper economic linkages and heightened sensitivity to policy and market shocks. Image: Deutsche Bank
Federal Funds Target Rate While the Fed has begun easing monetary policy, the current federal funds rate remains notably above their estimated neutral rate, with plans for further gradual reductions to bring it closer to neutral over time. Image: Goldman Sachs Global Investment Research
U.S. Financial Conditions U.S. financial conditions are easing at fastest pace since 1990, thanks to policy stimulus. Image: Goldman Sachs Global Investment Research
China Property Sales and Total Credit Growth According to Gavekal, Chinese monetary policy is still in a moderate “selective easing” mode. Image: Gavekal, Macrobond