Previous tightening cycles — for instance, the mid-1980s energy bust and the bursting dot - com bubble in the late - 1990s — rolled through the economy over five years or so.
Not exact matches
But if valuations had been rising in the
previous year, the S&P 500 has historically performed much worse following the start of a
tightening cycle.
In
previous episodes, long yields tended to rise in the early stages of a
tightening cycle at least as much as the rise in short rates, reflecting inflation concerns.
Readers may recall that we have talked about the theory espoused by our
previous guest speaker Ben Hunt with respect to price inflation in a period of monetary
tightening in a series of recent posts entitled «Business
Cycles and Inflation» (see Part 1 and Part 2 for the details).
In spirit, the current
tightening cycle is no different from
previous ones, in that the FOMC is balancing the tradeoff between inflation and growth.