How global equities performed in prior Federal Reserve easing cycles

Equity market behavior following US Federal Reserve rate cuts varies with economic conditions, with historical trends showing increased global equity market performance during expansions. When the Fed initiates rate cuts without leading into a recession, equity returns typically exceed historical averages.

Additionally, US Treasuries have consistently performed well in rate-cutting cycles and serve as a strong hedge during recessionary periods. With the Fed likely to begin cutting rates in September, a recent analysis expanded the examination of asset-market performance to include non-US equities, underlining the global impact of the Fed’s decisions and the expectation that other central banks may follow suit.

Assessing the timing of these cuts in relation to economic conditions is crucial for predicting market outcomes.