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Market Update February 13
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STRATxAI

May 2024

Market Review - February 13, 2023

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Introduction

Last week, in our inaugural market review, we analyzed one of the hottest starts to the year in financial markets. We delved into the influence of the U.S. Federal Reserve's intervention on the market and examined the performance of various asset classes. You can read the full post here.

This week, we will dive deeper into the historical impact of interest rate changes and how it impacts market performance. Once again, we will inspect the recent performance of various asset classes and strive to provide some clarity about the current financial landscape.

Interest Rates

The Federal Reserve has tempered its interest rate increases in pursuit of a "soft landing." We've analyzed past instances where the Fed has paused rate hikes, as depicted in the red highlights on the chart below. From our analysis of the two previous occasions, we observe that the market initially reacts positively and surges to new record highs. However, these gains tend to be short-lived, and sharp declines of 55% and 34% were experienced in 2009 and 2020. Will we witness a similar pattern this time?

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