Source: Wall Street News

The IMF became a weather vane for risk aversion in the US market. Figure 1. In the past four weeks, the size of the IMF increased by as much as 300 billion US dollars, setting a historical record of 5.1 trillion US dollars.

Meanwhile, Bank of America pointed out that in the past two times when the size of the IMF soared like this, the Federal Reserve initiated interest rate cuts:

Figure 2. When the size of the IMF soared from $2.5 trillion to $4 trillion in 2008 (deep blue line), the Fed's policy interest rate fell from 5% to 0%. When the IMF rose from $3.5 trillion to $5 trillion in 2020, the Federal Reserve's policy interest rate fell from 2.5% to 0%.

Editor/Somer