S&P 500 Performance for All Republican Terms In Republican presidential terms, the S&P 500 tends to perform worse in the second half of the first year than in the first half, as policy impacts and economic realities set in. Image: Fundstrat Global Advisors, LLC
Inflation – U.S. Core PCE and Forecasts U.S. core PCE inflation is expected to have decelerated significantly in November, reinforcing expectations that the Fed’s monetary policy is effectively controlling inflation. Image: Nomura
Fed Funds vs. 2-Year U.S. Treasury Yield (Leading Indicator) The current 2-year U.S. Treasury yield, sitting below the fed funds rate, indicates that the Fed’s monetary policy is restrictive. Historically, the 2-year yield tends to lead the fed funds rate by approximately 20 weeks. Image: Bloomberg
Inflation – U.S. Core PCE Deflator The recent stalling of disinflationary progress in U.S. core PCE deflator could complicate the Federal Reserve’s monetary policy decisions. Image: Deutsche Bank
U.S. Equity Index Option Volume As Trump prepares for his second term, the combination of his policy direction and the prevailing market conditions is poised to boost the options market, particularly among retail investors. Image: Bloomberg
Markets – Cumulative S&P 500 Growth vs. Cumulative Real GDP Growth vs. Cumulative S&P Sales Growth The growing disconnect between the U.S. stock market and real economy raises concerns about economic inequality, financial stability, policy challenges and sustainable growth. Image: Real Investment Advice
U.S. 10-Year Treasury Yield Around Close Presidential Elections While U.S. elections are significant in shaping economic policy and affecting investor sentiment, they do not consistently drive changes in the U.S. 10-year Treasury yield. Image: Deutsche Bank Asset Allocation
U.S. Real Yields While not extreme, the current U.S. real interest rate of about 2% is relatively high, reflecting a restrictive monetary policy aimed at bringing inflation under control. Image: Bloomberg
ISABELNET Cartoon of the Day With Republicans achieving a trifecta by winning the House, Senate, and presidency, Democrats will find it difficult to advance their policy agenda. Historically, markets have performed best under a divided Congress. Have a Great Day, Everyone! 😎
Performance Based on Congress Makeup – Average S&P 500 Index Annual Return Historically, a split Congress has frequently led to favorable U.S. stock market performance, as investors often view the reduced policy risk and increased stability of divided government positively. Image: Carson Investment Research
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