We recently took a look at what can happen to markets when the Fed starts cutting interest rates. Download a high resolution PDF with key takeaways.
Key Takeaways
- Historically, rapid rate hiking cycles have impacted the economy and markets with a substantial lag. Much of the weakness in the stock market tends to occur after the last hike.
- Despite this, markets currently seem to be operating under the assumption that the pressure from this hiking cycle will be alleviated when the Fed cuts rates.
- Equity performance in rate cut cycles varies based on the health of the broader economy. When the economy is strong, stocks generally perform well. When the economy is weak, markets tend to sell off.
- If the Fed cuts rates this month, it will mark 14 months between the last hike and the first cut. On average, there are five months between the last hike and the first cut.
- The first rate cut in a cycle has rarely been a strong signal for investors to increase risk. We remain cautious on risk assets at this point in the cycle.
The opinions and analyses expressed in this presentation are based on Curi RMB Capital, LLC’s (“Curi RMB Capital”) research and professional experience are expressed as of the date of our mailing of this presentation. Certain information expressed represents an assessment at a specific point in time and is not intended to be a forecast or guarantee of future results, nor is it intended to speak to any future time periods. Curi RMB Capital makes no warranty or representation, express or implied, nor does Curi RMB Capital accept any liability, with respect to the information and data set forth herein, and Curi RMB Capital specifically disclaims any duty to update any of the information and data contained in this presentation. The information and data in this presentation does not constitute legal, tax, accounting, investment or other professional advice. An investment cannot be made directly in an index. The index data assumes reinvestment of all income and does not bear fees, taxes, or transaction costs.
