TSLA
Tesla
-- 355.840 NVDA
NVIDIA
-- 138.850 INTC
Intel
-- 23.600 NBIS
NEBIUS
-- 44.490 PLTR
Palantir
-- 119.160 
What to Buy During Fed Rate Cuts in a Recession?
We know that rate cuts can come in two forms: preventative and recession-driven. Preventative rate cuts occur when the economy is slowing down, aiming to stimulate business expansion and consumer spending, usually leading to higher asset prices. In contrast, recession-driven rate cuts happen during an economic crisis to salvage the economy, often resulting in significant drops in asset prices.
So, what should you buy during a recession when rate cuts are in play? ![]()
Rate cuts will lower interest rates on bank deposits and bond yields. As bond yields decrease, bond prices generally rise, regardless of the overall economic situation. Therefore, during a recession, you should buy U.S. Treasury bonds.
Looking at recent recessions: In July 2024, concerns about a recession caused by employment data and CPI led to a sharp drop in the Nasdaq, but U.S. Treasury bonds (TLT) rose. In March 2020, recession fears from the COVID-19 outbreak led to a quick drop in the Nasdaq, while bonds increased. Similarly, during the subprime mortgage crisis from August to December 2008, the Nasdaq fell sharply, but bond prices went up.
In summary, when recession concerns arise, sell stocks and buy bonds. Once the recession fears ease or the recession ends, sell bonds and buy stocks. This approach is more effective than doing nothing, as you can’t predict the duration of a recession—what if it lasts as long as Japan’s 30-year stagnation?
The above content is personal opinion and for reference only. If you have any other opinions, please feel free to leave a message.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
Discussing
Trump 2.0 Era: How will global markets evolve?
🎙️Discussion: 1. How will tariff policies affect the movement of key assets such as U.S. stocks, gold, and Bitcoin? 2. Given this context,
Moo Live
Jan 23 16:54
MicroStrategy Q4 2024 earnings conference call
EZ_money : gold is better than bonds
EZ_money : rate cuts will spike metals....bonds are
assets do not help with inflation. gold, silver, euro
EZ_money : buying treasuries from a country that has 33 trillion dollars of debt and going to default on that debt....i wouldn't touch them
Revan2000 EZ_money :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
mjbond : you are right on Bond price movement. is does move relative to interest rate. Bond is also the most liquid products in the market. well, some unintelligent comment compare it gold and other commodities, is pure dumbness
mjbond EZ_money : the most dumb comment from u who trade Nasdaq![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
mjbond EZ_money : trading Bonds is for experienced traders. newbies like you don't know how to trade it. funny how you can relate 2 different products as a comparison. well.... it show your level of experience
EZ_money mjbond : hell of a lot more experience than you how did those bonds work out today? how about Gold. where do you think the treasuries come from? Who sells the treasuries?
EZ_money mjbond : oh i see you only trade crypto
mjbond EZ_money : I trade index, Futures, bonds and crypto. I don't hate any trading instrument or love any. each one has their cycles to profit. now fkli nicer to trade compare to fcpo. last year , I only trade fcpo. bonds are even sweeter to trade. volume even surpass snp and nasdaq
View more comments...