Market stress crash at 100
S&P drawdown from peak0.0%
Crash threshold−30%
Vital signs
Dual mandate map unemployment vs. inflation
Policy path % by meeting
Fed fundsCore PCE inflationUnemployment
S&P 500
Fed funds futures
Rate decision
Forward guidance
Balance sheet
News wire
How the economy responds
- Rate changes hit the economy with a lag of several meetings. Inflation reacts last.
- Markets price the move they expect. A surprise in either direction spikes stress.
- Credibility anchors inflation expectations. Cutting into high inflation burns it; holding real rates positive rebuilds it.
- QE pushes long yields down and supports demand, but costs credibility when inflation is high. QT does the reverse.
- The market crashes if stress reaches 100 or stocks fall 30% from their peak. Survive 32 meetings (a four-year term) to be graded.