The market's swift move this week to price in a quarter point interest rate cut so soon after the Fed's December's rate hike should come as no surprise.
The bond market has quickly priced in a Federal Reserve interest rate cut this year, just days after the Fed said it would stop raising rates.
Joseph LaVorgna, Natixis' economist for the Americas, studied the last five tightening cycles and found there was an average of just 6.6 months from the Federal Reserve's last interest rate hike in a hiking cycle to its first rate cut. "For example, there was only one month from the last tightening in August 1984 to the first easing in September 1984. This was followed by a four-month window succeeding the July 1989 increase in rates, a five-month gap after the February 1995 hike, an eight-month interlude from May 2000 to January 2001, and then a record 15- month span between June 2006 and September 2007," he wrote.
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