Interview
Are More Rate Cuts Coming?
- The Federal Reserve executed a third consecutive 25 basis point rate cut, diverging from prior expectations of a "hawkish" pause to signal a "dovish" stance.
- Federal Reserve Chair Jerome Powell expressed significant concern regarding the labor market, suggesting the threshold for future rate cuts may be lower than the consensus anticipated.
- Although six members exhibited "soft dissent" and two formally dissented (one for holding rates, one for a 50 basis point cut), the meeting ultimately reflected broad-based support for the 25 basis point reduction.
- Powell indicated the Federal Open Market Committee will "watch and wait," evidenced by the reversion to December 24 language in the official statement.
- Josh Schifrin forecasts the federal funds rate will reach 3% or lower by 2026, noting that future decisions will hinge heavily on upcoming labor data, particularly the unemployment rate, amidst potential noise from government shutdown collection issues.
- Schifrin projects a steepening yield curve between 2-year and 10-year Treasuries, rising from the current 60 basis points to 100 basis points or higher by 2026.
- A weakening trend for the US dollar is expected to resume into 2026, following a stallout later in 2025.
- Equity markets remain cautiously bullish through year-end and into 2026, supported by monetary easing and anticipated economic acceleration, with long-term rate increases attributed to stronger growth rather than acting as a impediment to risk assets.
- Potential volatility in risk assets is identified as being more likely linked to AI thematic concerns than to monetary policy or yield curve dynamics.
- Schifrin expressed conditional willingness to trade for Giannis Antetokounmpo if a deal becomes available, citing a desire for an NBA championship for the Knicks.