Rate Cycles, from anonymous

2015-12-10 · anonymous
Original source

I looked at 3 month T bills to identify tightening/easing cycles since 1954 from a chart at FRED. There are 10 cycles that stand out. This is retrospective as the cycles could only be identified after the fact.

Given that, below is the SP500 performance comparison using weighted annual growth rates during each leg of the cycle. There is some evidence that stocks do better during easing over the whole period, but since 1976 they are about the same at positive 8%.

Since 1954

Easing cycle              8.6%    28 total years

Tightening cycle        6.6%    33 total years

Since 1976

Easing                       8.0%    23 years

Tightening                 8.4%    16 years