The rate cut has been on my mind, and I'm sure I'm not the only one. What makes this one more interesting is the yen carry over trade. If we get 50bps, the fed might look desperate, it can weaken the dollar, and cause the yen to rally again.
50bps vs 25bpsA key debate about the current Pivot is whether the Fed will cut by 25bps or by 50bps. The chart below (h/t CharlieBilello) shows the quantum of the first rate after a hiking cycle and it indicates that one should be careful what they wish for:
- A 50bps cut is usually associated with weakness in the economy and the forward returns of the Market are abysmal…
2007 vs 2024:Speaking of which, the one period that comes to mind when we compare to today is 2007....