Last night, the Federal Reserve announced a 50 basis point interest rate cut, marking the official start of a rate-cutting cycle in the United States. This decision has drawn widespread attention, with many speculating how this policy shift will impact U.S. stocks, A-shares, the RMB, gold, and the real estate market. To gain deeper insights into the future trends of these assets, we can refer to a recent research report published by Haitong International, which provides a detailed analysis of the performance of various assets during the Fed's rate-cutting cycles over the past 30 years.

Two Types of Rate Cuts

Haitong International categorizes the Fed's rate cuts into two types: rescue cuts and preventive cuts. Rescue cuts typically occur after major negative events, such as the dot-com bubble burst in 2001, the global financial crisis in 2008, and the COVID-19 pandemic in 2020, all of which were accompanied by significant rate cuts by the Fed. Preventive cuts, on the other hand, are implemented when the economy shows signs of slowing down or potential recession, aimed at stabilizing the economy and employment, as seen in the current rate cut.

Historical Review of Rate-Cutting Cycles

Since 1982, the Fed has conducted four rescue cuts and five preventive cuts. The cumulative magnitude and speed of rescue cuts are usually much higher than those of preventive cuts. For example, the rate cuts in 2001 and 2008 exceeded 500 basis points, while preventive cuts are generally smaller in scale, such as the 563 basis point cut in 1984, but more frequent.

Asset Performance Analysis

1. U.S. Stocks: During rate-cutting cycles, the probability of U.S. stocks rising is relatively high, at 67%. Except for the crises in 2001, 2008, and 2020, U.S. stocks generally rose during other rate-cutting periods.

2. A-Shares: Contrary to common expectations, the probability of A-shares rising during Fed rate cuts is less than 50%, and the recent economic outlook has not been optimistic. The impact of this round of rate cuts on A-shares may be limited.

3. RMB: Although the U.S. dollar tends to weaken during rate-cutting cycles, the RMB does not necessarily strengthen. Historical data shows that the RMB's exchange rate against the U.S. dollar does not always rise during rate-cutting cycles.

4. Gold: Gold performs relatively well during rate-cutting cycles, with a 56% probability of rising. Recently, gold prices hit a record high, consistent with historical trends.

5. Real Estate Market: Although the report does not mention it, the current state of China's real estate market suggests that the downward trend in housing prices and low yields make it unlikely for funds to flow into the real estate market.

While history may not repeat itself exactly, understanding the past can help us better predict the future.