Interview
Are More Rate Cuts Coming?
- The barrier for a federal funds rate cut in January may be lower than consensus anticipated, though the Fed's prevailing stance suggests a "watch and wait" approach reinforced by specific statement language.
- Economic projections indicate unemployment and job growth pace will be critical monitoring variables for the January meeting, with upcoming labor data potentially appearing noisy due to government shutdowns and collection issues.
- The federal funds rate is forecast to decline to 3% or below at some point during 2026, while monetary policy is expected to generally support risky assets throughout that same year.
- Economic growth is anticipated to accelerate next year with continued strong broad economic performance, potentially prompting long rates to rise without negatively impacting the outlook for risky assets.
- The 2-10 Treasury yield curve spread, currently approximately 60 basis points, is projected to steepen to 100 basis points or higher by 2026, driven by expectations of a yield curve steepening.
- The US dollar is expected to resume a weakening trend as the year concludes and extends into 2026, coinciding with a cautiously bullish trajectory for equities through year-end.
- Potential volatility in risky assets is viewed as more likely stemming from concerns regarding the AI thematic rather than movements in long-term rates.
- Disclaimers indicate that opinions are subject to change without notice, the transcript contains forward-looking statements, and past performance is not indicative of future results.