Cutting cycles and learning to love bonds again

From the Field

History provides some clues about which asset classes are likely to outperform

2024-09-24 08:55

Sébastien Page, CIO and Head of Global Multi-Asset

Key Insights

We studied 12 Fed cutting cycles spanning over 70 years and found commonalities across cutting cycles that could inform current asset allocation decisions.
The most obvious takeaway is that bonds outperformed cash in all 12 cutting cycles by an average of 8.1%, annualized.
For many asset classes, isolating the effect of interest rates (i.e., estimating duration) is extremely difficult and requires judgment calls.

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Important Information

This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.

The views contained herein are those of the authors as of September 2024 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.

This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types, advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circumstances before making an investment decision.

Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy. Actual future outcomes may differ materially from any estimates or forward-looking statements provided.

Past performance is not a reliable indicator of future performance. All investments are subject to market risk, including the possible loss of principal. All charts and tables are shown for illustrative purposes only.

T. Rowe Price Investment Services, Inc., distributor. For Institutional Investors Only.

202409-3847544

Sébastien Page, CFA®

Head of Global Multi-Asset and CIO

Sébastien Page is head of Global Multi-Asset and chief investment officer. He is a member of the Asset Allocation Committee, which is responsible for tactical investment decisions across asset allocation portfolios. Sébastien also is a member of the Management Committee of T. Rowe Price Group, Inc.