If the Fed eases, as expected at its July 31 meeting, what will the market response be? Can history offer any insight? This comparison remains an informative way to think through possible outcomes:
Executive Summary
- 1998 remains the best analogue to understanding the Fed actions today and likely market responses.
- In 1998 investors were consumed with worry back then for good reason: a flat to inverted yield curve, an emerging markets crisis, impeachment worries, and fears about a middle eastern power (Iraq) developing weapons of mass destruction. In 2019 investors are also consumed with worry: