On February 8, Duncan Lamont, head of the Global Investment Strategy Research Department at Schroders, stated that research has shown that in the 12 months following the start of Fed rate cuts, the average return of the US stock market was 11% higher than the inflation rate, with stocks outperforming government bonds by 6% and corporate bonds by 5%. Cash performance significantly lagged behind, with stocks outperforming cash by 9% on average in the 12 months after the Fed began cutting rates, and bonds also performing better than cash. The research found that in 16 rate-cutting cycles, the US economy either began cutting rates or entered into a recession within 12 months, making current return rates more impressive. If economic recession can be avoided, stock returns will be better, but if unavoidable, stock returns on average are still positive. However, there are exceptions, as economic recession is not a positive development, yet it may not be a cause for excessive concern for stock market investors. On the contrary, bonds tend to perform better in times of economic downturn. Bonds typically benefit from safe haven inflows, especially government bonds, which can lead to lower bond yields and higher bond prices. But if economic recession can be avoided, bonds also tend to perform well. In more optimistic economic scenarios, corporate bonds usually outperform government bonds. Historically, there is a significant gap in returns between stocks and bonds, but when the Fed starts cutting rates, they both tend to perform well. What is the current situation? Unlike most historical scenarios, the Fed is not considering rate cuts at the moment due to concerns about the US economy being too weak. This is partly because inflation is moving in the right direction, which means monetary policy does not need to be overly tight. If the Fed's outlook is correct and it manages to achieve an "soft landing" for the economy, 2024 could be a good year for both stock and bond investors.