What’s the First Thing to Move When Rates Drop?
This is something I keep thinking about whenever interest rates come up these days—looking at past cycles, the market had already reacted before rate-cut signals even turned into actual cuts.
So right now actually feels like an awkward window to do nothing. I’m curious how everyone else is looking at it.
10 answers
Bonds move first, gotta admit
Do you happen to have any references? I'm curious whether it's just a hunch or based on data.
Well, that's a bit... The phrase 'the market prices it in ahead of time' is itself hindsight. In reality, there were plenty of times when rates bounced back after cuts actually began, and if pre-pricing explained everything, no one would have taken a loss, right?
Last year, I bought some long-term bonds because I believed that talk about an “ambiguous zone.” At first it went well, but when the exchange rate spiked, I gave back almost all the gains. Looking back, the problem was trying to call the direction; if I’d just scaled in, I would’ve been much more comfortable mentally. I really think position sizing, not timing, is the answer.
Me too.