Bonds Signal Largest Rate Cuts Since Financial Crisis. What It Means for the Stock Market.
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Sep 10 2024
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Should l Buy ?
Source: Barron's
Monetary Policy Shift: The U.S. bond market indicates expectations for significant monetary policy changes, with the gap between the 2-year Treasury yield and the effective federal-funds rate reaching its widest negative differential since January 2008, suggesting aggressive rate cuts by the Federal Reserve in response to potential economic downturns.
Market Implications: While the current situation does not resemble a balance-sheet recession like in 2008, historical data shows that a similar spread has preceded stock market declines; however, long-term trends indicate positive returns for the S&P 500 following such spreads, especially during election years.
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About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
