Market Musings 1/28/2026
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
An optimistic Fed, but Is the economy really good to go?
The Fed sounds optimistic about the economy, but is it actually getting better?
As expected, the Fed held rates steady at its first meeting of the year. After three straight cuts, #RateCuts now appear officially on pause… but that wasn’t a surprise. Markets weren’t expecting #RateCuts this meeting. While there were two dissents, Powell emphasized that the decision to pause #RateCuts had broad support.
So, how does the Fed feel about the economy right now? Pretty solid.
Powell said policy is now “well positioned to address the risks we face” noting that #LaborMarkets appear to be stabilizing and #Inflation continues to move closer to the Fed’s 2% target.
He also described current rates as close to “neutral,” meaning they’re no longer meaningfully slowing or stimulating the economy. That’s important, because it suggests #RateCuts going forward could be fewer and farther between unless something materially changes.
So, will something change? That’s the big question.
Markets are still pricing in around two #RateCuts this year with the first potentially coming as early as June. If policy is already near neutral, that may be a bit aggressive…
We still see some wildcards ahead with #Tariffs still in flux, #LaborMarkets stabilizing but still fragile and Fed leadership changes mid-year.
For now, the Fed is optimistic, but the economy may need to become a little more unbalanced to justify further #RateCuts. Next up will be January #LaborMarkets data next week. We’ll see if the positive unemployment trend holds.
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Original Photo by Pixabay.