Fed Funds Rate- Interesting patterns

Effective Federal Funds RateFRED

Description

⋅ Mar 2, 2020 5:54 PM

Was just taking a look at the rate and noticed the EMA. 200 EMA is currently at 1.71 with the 10 day at 1.86.

Black horizontal lines are approximate time when 10 day crossed below 200 day. Purple are the listed start of a recession.

Just found this interesting and especially since it's on 15 bp away from crossing to the downside again.

You'll also notice that it crosses back down within 6-12 months of crossing to the upside (in the last 30 years).

1977-1985 are exceptions to the 6-12 months and did not cross to the downside around a recession (recession of 1980 and 81-82 fell in between)

Take this how you'd like, but it's definitely a good idea to at least take something (whether bullish or bearish) from this.

Comment

⋅ Mar 2, 2020 6:44 PM

Full look from 1954 on.

Comments

Dougbneal

⋅ Mar 2, 2020 6:00 PM

Very good!! Interesting! I think you should include the period starting in 1985 to present to capture the 1987 mini crash.

I think the US is in a 1987 crash-like situation in that it will be temporary like then. The US is by far in better shape than the rest of the world, so money will keep coming here.

Great work! Congrats!

MichaelMF

⋅ Mar 2, 2020 6:03 PM

@Dougbneal, I appreciate it. I just didn't want the chart to get too small where it's almost impossible to notice the little things. At that large and with no ability to blow it up the chart and points are basically useless lol I will add that though. Thank you.

Dougbneal

⋅ Mar 2, 2020 6:06 PM

@Michael941, No prob. I do know interest rates were rising sharply and consistently in 1987 and the market kept screaming higher--until it hit a 27% air pocket in Oct. The market recovered by Xmas '87.

MichaelMF

⋅ Mar 2, 2020 6:45 PM

@Dougbneal, Yeah it was definitely a big move. All the way up to 19. And we can't really get to 2 without hopes of cuts now lol.