Future interest rate hike announcements play a huge role in the market. This visual from Blackrock depicts on the left panel what the Fed has in past months estimated the future trend of interest rates.
Each month, the Fed members take a vote, and the median forecasted Federal Funds Rate is plotted for the next few years. We see the curves for several months up to June, with the actual FFR trend plotted in green. You can see can see that even though the actual FFR the last few months has not actually deviated from what was expected back in say September 2021, the trajectory is much steeper and scheduled to be a lot higher than what was anticipated.
This is why forward guidance and the rate of interest rate hikes matter. The December '21 curve and June '21 curve have dramatically different implications, and this has played a huge impact on the bear market we've experienced so far.
This is what financial conditions have done as a result. The Fed did this through forward guidance, not interest rate hikes. Changes in that future curve immediately affect bond prices/yields in global government and corporate credit markets, and as a result, translate to dampened equity valuations.
I took this data and graphs from Blackrock's weekly market commentary. They publish weekly their tactical (short term) and strategic (long term) views on different asset classes (emerging market stocks, private credit markets, etc.) I don't find those so valuable, but I do like their summary on markets each week. Here is the year-to-date performance of a broad set of assets. They write in this figures caption that “the two ends of the bars show the lowest and highest returns at any point this
year-to-date, and the dots represent current year-to-date returns.”
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