Citigroup Recap Period: Historical Pattern around First Rate Cut - US Stocks and Bonds Rise Together, Gold Initially Strengthens and then Plateaus

BlockBeats News, September 17th. According to Citigroup Research, historical data shows that the median performance of US stocks and bonds around the first rate cut has been positive. Stocks have historically seen a median increase of about 5% in the 50 days following a rate cut, but there is downside risk in a hard landing scenario. Bonds have also benefited from rate cut expectations and actual cuts, with yields typically hitting a low around the time of the first cut.

The US Dollar Index has exhibited a "weakness first, then sideways" pattern, usually weakening before a rate cut and then entering a period of range-bound trading after the cut. Precious metals like gold have similarly risen before the onset of loose monetary policy, but their performance has tended to flatten after actual rate cuts, leading to more of a range-bound trading pattern.

Citigroup analysts stated that these historical patterns were broadly validated in 2024, but bond prices peaked around the time of the first rate cut. At that time, the market had priced in rate cuts aggressively, while pricing in this current cycle has been relatively moderate, easing concerns about the outlook for bonds. (Wall Street News)