Fed Easing Cycle: Tracking “no recession” Fed easing cycles so far

The Fed cut by 25 bp in September as widely anticipated, which we flagged as a “buy the rumor, sell the fact” (link) event that would likely mark the low in yields and the US dollar for the year.

Asset price behavior after the first Fed cut depends heavily on if a recession materializes or not. Today, our leading indicators do not foresee a recession, which means the most comparable analogs are the “no recession” Fed cuts in 1984, 1995, and 2024 (link).

Since the September 17th rate cut, asset price behavior has been mostly in line with historical “no recession” cuts. The S&P remains resilient, the US dollar has bounced a little, and US 10y yields are off the lows.

So far the yield curve has not reacted, which is more similar to “no recession” Fed easing cycles. Recessionary Fed easing cycles tend to see much more dramatic yield curve steepening.