PremiumHiking Into A Bubble: Goldman Finds Only One Fed Cycle Looks Like Today... And It's 1999
Six weeks after Kevin Warsh delivered the first Fed rate hike since July 2023, and a few hours before he explains why he isn't delivering a second one today, Wall Street is busy doing what it always does at the start of a tightening cycle: digging through the history books to figure out what happens next.
The latest - and most comprehensive - such dig comes from Goldman's Vickie Chang, who in her latest Global Markets Daily: Macro Assets in Fed Hiking Cycles note (available to pro subs) looks at how stocks, yields, the curve and the dollar behaved after the first hike in each of the nine tightening cycles since 1983. The good news: equities tend to wobble after the first hike, then recover quickly. The bad news: of the three "modest" cycles that look most like what the market expects this time, the one whose macro backdrop rhymes best with 2026 is 1999.