Commentary

The Fed pivots: Lower rates, higher stakes

An analysis of previous rate-cutting cycles and macroeconomic conditions suggests a wide range of potential asset class outcomes in a hard or soft landing.

By: Brian Hayes Chris Luongo Lance McInerney Andrew Dierdorf Brett Sumsion
Updated: 10/9/2024
Key Takeaways
  • Recent trends in inflation, employment, and gross domestic product (GDP) growth support a non-recessionary (soft landing) outcome.
  • Forward interest rate curves suggest that investors are expecting rate cuts to be larger than rate cuts in historical non-recessionary environments.
  • Equities have outperformed fixed income after the first non-recessionary cut, led by developed markets excluding the U.S.
  • Fixed income (as measured by the Bloomberg U.S. Aggregate Bond Index) had positive returns in non-recessionary and recessionary rate cuts and outperformed equities when the recession odds approached 60%.
  • Commodities have lagged following both recessionary and non-recessionary cuts.
Get the full white paper
Target Date Insights - Fulcrum Issues: The Fed pivots: Lower rates, higher stakes 4Q 2024
Download PDF
Explore more on:
Asset allocation Defined contribution

Next steps to consider

Asset Allocation Strategies

Draw on unmatched resources, scale, and experience with our broad range of asset allocation strategies.

Learn more

Custom Investment Solutions

Discover how our investment solutions can be tailored to meet your unique goals and objectives.

Learn more

The Bloomberg U.S. Aggregate Bond Index is a broad-based flagship benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate pass-throughs), asset-backed securities, and collateralized mortgage-backed securities (agency and non-agency).

1170216.1
979FC5E9065346A79A6A6AE9D50B1DCD