QCI #041 - The Fed is Cutting the Federal Funds Rate

Let's Talk Economics!

Part II of II Part Series:

Link to Part I:

QCI #040 - Job Market Has Cooled But Warming Up Soon

Let’s Talk Economics! Part I of II Part Series: With the job market cooling in early 2026 compared to 2023 and 2024, spending fears due to unemployment are increasing. This is normal, but the Central Bank is currently lowering the Federal Funds Rate. So the unemployment rate should decline

Quant CompassPeter Nunes

The Federal Funds Rate is a leading indicator of the Unemployment Rate, and the two economic indicators are correlated; when the Federal Funds Rate is cut, Unemployment falls with a 1Q-2Q lag. When the Federal Funds Rate is raised, unemployment rises with a 1Q-2Q lag.

The current Central Bank Chair's fiscal policy is to cut the Federal Funds Rate, which means unemployment should be coming down over the next two quarters.

If this is new to you, take a look at the Yield Curve and the never-ending US and Global Macro Economic Cycle: https://www.linkedin.com/pulse/what-yield-curve-peter-nunes/?trackingId=AMAdEQ6OSm%2BmyGCWIDRF7A%3D%3D

Link to the historical Effective Federal Funds Rate published by the Federal Reserve Bank of St. Louis:https://lnkd.in/eGZqPrD5

Let's take a look at the historical Federal Funds Effective Rate below:

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