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Wall Street History
https://www.gofundme.com/s3h2w8
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06/04/2004
The Fed and Market Stats
Most folks believe the Federal Reserve will embark on a new
tightening program for interest rates when it gathers this coming
June 29-30, so I thought I’d update a previous piece concerning
some key market barometers.
Going back a few years, the Fed raised its benchmark federal
funds rate to 6.50% on May 16, 2000, but then began a concerted
effort to slash interest rates on January 3, 2001. From 1/3/01
through 6/25/03, the Fed lowered the funds target to 1.00% with
13 cuts, 9 of 50 basis points (0.50%) each, 4 of 25.
For your reference I’ve gathered some data from my “Week in
Review” pieces. One item of note is to remember how the Fed’s
first 11 cuts left the 10- year exactly where it was one year earlier
before the first move. In other words, those trading the long end
of the yield curve are a most independent lot. [Not that most of
you didn’t already know this.]
Of course the Fed only directly influences the short end, while
the long end is dominated by perception; perception of strength
in the economy and future expectations for inflation being among
the primary factors in setting bond prices, though these days you
also have to factor in the war on terror.
Note: The * tells you that a Fed rate cut occurred in the period
prior to the week ending figures. I also make note of 9/11, as
well as the cycle low in the S&P 500 on 10/9/02. Finally, you
should know that the 2- and 10-year Treasuries bottomed in yield
on 6/13/03 1.01% and 3.10%, respectively.
Week ended ..2-yr. 10-yr. S&P 500 ..Gold
12/29/00 ...5.09 ..5.11 ..1320 ...272
1/6/01 ...4.56 ..4.93 ..1298 ...269 * (1)
1/27/01 .4.77 ..5.27 ..1354 ...263
2/24/01 .4.52 ..5.09 ..1245 ...262 * (2)
3/31/01 .4.18 ..4.92 ..1160 ...259 * (3)
4/28/01 .4.26 ..5.32 ..1253 ...264 * (4)
5/26/01 .4.26 ..5.51 ..1277 ...278 * (5)
6/30/01 .4.24 ..5.40 ..1224 ...271 * (6)
7/28/01 .3.87 ..5.10 ..1205 ...267
8/25/01 .3.73 ..4.92 ..1184 ...275 * (7)
9/29/01 .2.82 ..4.58 ..1040 ...294 * (8) ^9/11
10/27/01 ...2.62 ..4.52 ..1104 ...278 * (9)
11/24/01 ...3.16 ..5.00 ..1150 ...273 * (10)
12/29/01 ...3.16 ..5.11 ..1161 ...276 * (11)
1/26/02 .3.18 ..5.07 ..1133 ...279
2/23/02 .2.92 ..4.83 ..1089 ...293
3/30/02 .3.70 ..5.40 ..1147 ...303
4/26/02 .3.23 ..5.08 ..1076 ...311
5/25/02 .3.22 ..5.14 ..1083 ...320
6/29/02 .2.82 ..4.80 989 ...314
7/27/02 .2.21 ..4.38 852 ...304
8/31/02 .2.15 ..4.14 916 ...313
9/28/02 .1.80 ..3.67 827 ...321
10/26/02 ...1.98 ..4.09 897 ...313-10/9 S&P 776
11/30/02 ...2.06 ..4.21 936 ...318 * (12)
12/28/02 ...1.61 ..3.81 875 ...349
1/31/03 .1.71 ..3.97 855 ...369
2/22/03 .1.59 ..3.89 848 ...351
3/29/03 .1.54 ..3.90 863 ...332
4/26/03 .1.56 ..3.88 898 ...333
5/31/03 .1.32 ..3.36 963 ...365
6/28/03 .1.35 ..3.54 976 ...345 * (13)
7/26/03 .1.51 ..4.18 998 ...362
8/30/03 .1.96 ..4.46 ..1008 ...376
9/27/03 .1.55 ..4.00 996 ...381
10/25/03 ...1.72 ..4.23 ..1028 ...389
11/29/03 ...2.04 ..4.33 ..1058 ...398
12/27/03 ...1.80 ..4.15 ..1095 ...412
1/31/04 .1.83 ..4.13 ..1131 ...403
2/28/04 .1.64 ..3.97 ..1144 ...396
3/27/04 .1.57 ..3.83 ..1108 ...422
4/24/04 .2.22 ..4.44 ..1140 ...395
5/29/04 .2.53 ..4.66 ..1120 ...394
Wall Street History will return 6/11 Levittown.
Brian Trumbore
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