Fed Rate Hike & Markets corelation

Historically, markets have always rallied when rate hike cycle begins.

Only in later half of rate high cycle, market TOPS first and then rates top a few months later.

So if you believe rate hike will bring markets down, think again??

In the beginning, a hike in rate means the Fed thinks economy is strong and it does not need impetus. It slowly keeps hiking rates, till a point when rate hike starts to affect economic growth, markets top and start correction.

Fed starts cutting later when markets in downtrend

In 2015 to 2018 market rallied and end of rate hike cycle small midcap party all day and night. 2018 se we all saw what happened to the party…It wld also 2.5yrs to get back to those levels.

All you need to understand is that if the rate hike cycle has just started or many hikes have already happened.

Disc – All views expressed are personal and only for educational and study purpose. Consult your financial advisor before investing or taking any position based on above article.

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