{"id":22353,"date":"2024-12-13T07:30:53","date_gmt":"2024-12-13T12:30:53","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=22353"},"modified":"2025-01-23T15:47:59","modified_gmt":"2025-01-23T15:47:59","slug":"heres-what-2025-will-bring","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/heres-what-2025-will-bring\/","title":{"rendered":"Here\u2019s What 2025 Will Bring\u2026"},"content":{"rendered":"

The FOMC is widely expected to lower its Fed Funds target rate by 0.25% when it meets next week. This won’t be a surprise. The market has been anticipating an interest rate cut. So, the cut itself will be no big deal.<\/p>\n

It will, however, have enormous implications.<\/p>\n

Look at this long-term monthly chart of the yield curve…<\/p>\n

\"chart\"<\/p>\n

(Click here to expand image)<\/a><\/p>\n

The yield curve has been inverted for more than two years. In other words, the abnormal condition where short-term rates are higher than long-term rates has persisted longer than any other time in the past four decades.<\/p>\n

Indeed, the yield curve has been inverted for so long that it “feels” almost normal. Nobody pays much attention to it anymore. <\/p>\n

All the worries about an inverted yield curve being a reliable predictor of a recession have been silenced. After all, it has been two years – and the economy seems to be running along just fine.<\/p>\n

But, as we’ve pointed out multiple times over the past two years, it’s not the inversion that signals trouble ahead. Instead, the problems occur when the yield curve shifts back into positive territory.<\/p>\n

Trouble Ahead<\/h2>\n

Just look at the three previous occurrences on the chart. The yield curve shifted into a positive state in early 2001, late 2007, and early 2020. Each time, the U.S. economy dipped into a recession.<\/p>\n

And, each time, the stock market suffered a significant correction.<\/p>\n

The depth and duration of those corrections matched the depth and duration of the yield curve inversion.<\/p>\n

So, it’s worth noting that the recent yield curve inversion was the longest and deepest of the past 40 years.<\/p>\n

Astute readers will notice the yield curve is currently inverted by only 9 basis points. So, when the FOMC lowers its Fed Funds target rate by 25 basis points next week, the yield curve will shift positive.<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

That doesn’t mean the stock market will start selling off right away. This aging bull might still be charging for the next few months.<\/p>\n

But, if the stock market follows the same script that played out when the yield curve shifted previously, then 2025 is going to be a tough year.<\/p>\n

Best regards and good trading,<\/p>\n

\"Signature\"<\/p>\n

Jeff Clark
\nEditor, Market Minute<\/em><\/p>\n

P.S.<\/strong> Tough years for the stock market can be the best time for smart traders to thrive. I had some of my best trading years ever in 2008 and in 2022 – years when almost everyone lost their shirts in the market.<\/p>\n

It’s because over 42 years of trading, I’ve honed my system. I’ve boiled it all down to the Magic Pattern<\/a>, which gives consistent wins, no matter which way the market is moving.<\/p>\n

So if you’re worried about a volatile market, you should check it out right here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

We\u2019ve got to keep an eye on the yield curve.<\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-22353","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/22353","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=22353"}],"version-history":[{"count":1,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/22353\/revisions"}],"predecessor-version":[{"id":23019,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/22353\/revisions\/23019"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=22353"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=22353"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=22353"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=22353"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=22353"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=22353"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=22353"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}