Not exact matches
The last time a Liberal government entered an election in the middle of a monetary policy
tightening cycle was in 2006; that
year, the Conservatives defeated them.
It did this in five steps over three
years — two in mid 2002, two in late 2003 and one in early 2005 — a more gradual
tightening cycle than normal.
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.
«By the time 10 -
year and 2 -
year Treasuries reach parity, as is almost the case now, the economy is typically slowing and the Fed is at or near the end of its
tightening cycle.»
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.
Now, as I noted fairly early this
year, there's no statistical evidence at all that stock prices or corporate earnings perform well in the 18 months or so following the end of a rate -
tightening cycle.
Fed Chair Janet Yellen last week signaled the U.S. central bank is on track to raise rates this
year, despite a weak first quarter that some analysts believe could force the Fed to wait longer before starting its first
tightening cycle since 2004 - 2006.
The Fed has been in a
tightening cycle for almost two
years.
Over the same
tightening cycle that ended in 2006, the impact on the 10 -
Year U.S. Treasury Bond yield was 60 bps higher, driving the 1 -
Year / 10 -
Year slope to flatten by 265 bps (see Exhibit 1).