Fed Fight

Market Musings 12/10/2025

Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!

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#RateCuts for weak #LaborMarkets, but sticky #Inflation may block more…

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Weak #LaborMarkets got us more #RateCuts, but stubborn #Inflation might stop us from getting another.

To no one’s surprise, we got the December #RateCuts with another 25 bps cut. However, the Fed meeting may not have been as straightforward as expected. Two members actually dissented arguing to keep rates unchanged and four others’ dot plot forecasts signaled no cut as well.

Speaking of the dot plot, the big disappointment was 2026 #RateCuts did not shift higher. The median still calls for just one cut next year－not the two markets were hoping for.

Powell reinforced that message noting policy is now “neutral”－not restricting the economy, but not stimulating it either. And going further, he emphasized that the Fed needs more data before considering further cuts. However, he also made it clear: rate hikes are still off the table.

Interestingly, markets still finished higher after the decision. Investors seemed encouraged by the Fed’s stronger economic projections and continued optimism for a #Goldilocks soft landing.

But the debate isn’t over. One camp is focused on #Inflation which is still nearly a percentage point above the target. The other on weakening #LaborMarkets which is what ultimately pushed the Fed #RateCuts this meeting.

However, we’re still behind on the macro data. This Fed meeting came a week too early. We’ll finally get the catch-up reports next week including November CPI for #Inflation and the November Jobs Report for #LaborMarkets. Those will likely shape expectations for January and beyond.