A Post-Fed Tale of Oil and Gold

If history is any guide, crude oil could be in for a bounce and gold may see more speed bumps, should the Fed raise interest rates in September

Jul 29, 2015 at 10:07 AM
facebook X logo linkedin


The recent uncertainty in Chinese markets has sent commodity markets tumbling -- with oil currently trading south of the round-number $50 mark, and gold lingering near levels not seen in five years. Today, the Federal Open Market Committee (FOMC) will release its latest monetary policy decision, and while not many are expecting an interest-rate hike to surface, most are predicting hints toward a September rate hike. So what does this mean for the state of markets?

As noted earlier, the S&P 500 Index (SPX) has historically seen short-term trouble in the wake of an interest-rate hike, but has stabilized in the long run. Along similar lines, Schaeffer's Senior Quantitative Analyst Rocky White ran the numbers for the commodity markets, and if past is precedent, oil could have a fighting chance, while gold may be facing some additional struggles.

Looking at the charts below, since 1980, there have been eight times the FOMC raised interest rates for the first time in at least a year. In the one month following the hike, crude averaged a gain of 0.6%, and was positive half of the time. Going out one year, the gain widened to 1%, although crude was positive less than two-fifths of the time.

Compare this to a one-month anytime return of 0.5% for the SPX -- and a one-year anytime return of 6.4%. In both time frames, the SPX was positive roughly half of the time.

150729spx1

Turning to gold, the data goes back to 1975, creating 10 signals in which the Fed raised interest rates for the first time in at least a year. In the one month subsequent to the central bank's action, gold averaged a loss of 1.1%, and was positive only one-fifth of the time. Widening the time frame to one year, the malleable metal returned an average gain of 5.9%, and was positive 50% of the time.

This lagged the anytime returns for the SPX, which averaged a one-month gain of 0.6%, and was positive half of the time. On a 12-month basis, the broad-market barometer logged an average return of 7.9%, and was positive 56% of the time.

150729spx2

150729spx3

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI