Historical pattern before and after the first interest rate cut in the Citi recovery cycle: US stocks and bonds rose, gold first strengthened and then leveled

According to Citi Research, from the historical data, the median performance of US stocks and bonds before and after the first interest rate cut is positive. The median increase of stocks in the 50 days after the interest rate cut is about 5%, but there are downside risks in the case of a hard landing. Bonds also benefit from the expected and actual interest rate cuts, and yields usually reach lows around the first interest rate cut. The performance of the US dollar index shows the characteristics of weakening and then flatlining, usually weakening before the interest rate cut, but entering the range after the interest rate cut. Precious metals such as gold also rose before the introduction of easing policies, but their performance tended to be flat after the actual interest rate cut, and more of a range trading pattern. Analysts at Citi said these historical patterns were largely validated in 2024, but bond prices peaked near the first rate cut, when the market priced a rate cut aggressively and the current cycle was priced relatively modestly, so concerns about the outlook for bonds eased.