FYI- Over the past decade, there have been 10 instances of both stock and bond traders liking a Fed decision (by the S&P 500 being up more than 0.5% on the day, and 10-year Note yields being down more than 0.5%).
Three trading days later, the S&P showed a positive return only 3 of those times, and its average return was -0.8%. 8 out of 10 times, the S&P slumped at least 1% within the two weeks following its positive Fed reaction.
The last time we saw this happen was June 29, 2006 - stocks screamed higher when the decision was announced, followed through a bit the next day or so, then plunged over the next two weeks. The time before that was September 21, 2004 and before that March 16, 2004...after which the S&P jumped after the decision, then lost at least 1.5% over the next few days each time.
Ignoring bonds for a minute, even during this bull market stocks have not performed well after a day when the S&P goes up at least 0.5% on a rate decision day, being positive two weeks later 5 out of 11 times with an average return of -0.3% (about a percentage point poorer than the average 10-day return during this time).
Now, not to mention that the fed changed there language and now is positioning themselves for slower growth and a potential cut when things start to slow..this is not a good combo for equities historically speaking. |
