When FRB interest rate cuts begin, there is a high probability that stock prices will fall - Mr. BoFA Hartnett

August 6, 2024 18:19 JST
Examining the history of the start of mitigation by the FRB since 1970 - last week's report
It is said that Mr. Hartnett is closely monitoring the US unemployment rate
Bank of America Bank of America (BoFA) strategist Michael Hartnett expressed the view in last week's report that there is a high possibility that stock prices will fall when the first interest rate cuts are implemented by the US Federal Reserve (FRB).
　　In the history of the beginning of mitigation by the FRB since 1970, he pointed out that interest rate cuts in response to economic downturns worked negatively for stocks and positively for bonds, citing 7 examples that demonstrated this pattern.

It is said that Mr. Hartnett is closely monitoring the US unemployment rate. The rise in the unemployment rate has reached a level where a recession (economic recession) based on rules devised by former FRB economist Claudia Sahm is expected.

The so-called “Sam Rule,” which has a high probability that a recession will begin when the 3-month moving average of the unemployment rate rises 0.5 points or more from the lowest value in the past 12 months, has had a perfect track record over the past half century.