Michael DePalma and Steven Friedman look ahead to 2026 — a year that should see US economic activity pick up as growth supports broaden out, raising the possibility that inflation proves sticky

Powell’s remarks and the policy statement suggest that economic activity and labor market conditions have remained broadly stable since September, undercutting the rationale for additional policy easing before year end.

The Fed cut rates 25 bps in September and signaled another 50 bps by year-end. The path ahead hinges on labor markets—further easing is possible, but strong growth and easy financial conditions may limit cuts.

Concerns over Federal Reserve independence, a change atop the Bureau of Labor Statistics and long-run fiscal issues pose risks to US policy credibility. Listen to our latest edition of Forward Guidance for how these developments impact our market and portfolio views.

Chair Powell’s remarks during his post-FOMC press briefing skewed somewhat hawkish and certainly displayed no urgency to begin cutting rates in September. Check out the latest episode of Forward Guidance, where Steven Friedman highlights three remarks in particular.

The rally in risk assets in recent weeks reflects a confluence of catalysts: falling trade tensions, reduced threats to Middle East oil supply, and anticipated Fed easing. Given this perfect storm of positivity, markets remain vulnerable to a repricing, especially around trade policy and the inflation outlook. We are navigating with what we call defensive agility: respecting the rally’s momentum but prioritizing structure and optionality.

The Committee’s June economic projections shifted in a hawkish direction, with firmer inflation leading to a modestly higher policy rate path in 2026 and 2027 despite a weaker growth and labor market outlook. And while the median Committee participant still projects two rate cuts by the end of this year, the individual projections also moved in a hawkish direction – seven Committee participants now see no rate cuts this year, up from four in the March projections.

In the latest episode of Forward Guidance, Steven Friedman and Michael DePalma dissect the implications of provisional trade war de-escalation for the economy, markets and portfolio positioning. The Treasury market also remains top of mind amid curve steepening and a fiscal plan making its way through Congress that could add close to $3 trillion to the public debt over the next decade.

Chair Powell made clear in his post-meeting press briefing that the Fed will not adjust policy preemptively given the uncertain effects of tariffs on growth, employment and inflation. There is another source of uncertainty for investors, however: how the Fed will react to economic outcomes that are likely to create tensions for monetary policy, namely, weaker growth and employment on the one hand, and higher inflation on the other. We believe there is an opportunity for the Committee to more clearly articulate its framework for adjusting policy in such a scenario.

The introduction of global tariffs by the Trump administration represents a fundamental shift in the international economic order. If sustained, the tariffs not only risk a US recession, but will also lead to a costly and laborious rewiring of global supply chains. In the latest edition of Forward Guidance, Steven Friedman and Michael DePalma discuss the market reaction to recent tariff news, opportunities in US and global credit markets, and guiding principles for managing portfolios in periods of market volatility.

From the March FOMC statement, to the Committee’s latest economic projections, to Chair Powell’s press briefing, the word of the day is “uncertainty.” Still, markets took a dovish signal from the suite of communications, with equities continuing to rally after the meeting, the Treasury curve bull steepening, and the DXY dollar index declining further. The latest projections show only a temporary effect of tariffs on the economy, and inflation in particular. This allows the Committee to stay on the rate cut path it laid out in December, including a median projection of 50 basis points of easing this year.

It has been a whirlwind of economic policy pronouncements over the first few weeks of the Trump administration. In the latest edition of Forward Guidance, Steven Friedman and Michael DePalma cut through the noise and focus on one key aspect of President Trump’s policy agenda – import tariffs and their likely impact on the economy and fixed income markets. They also touch on investing amid policy uncertainty, and relations between the administration and the Fed.

On the latest episode of Forward Guidance, Steve Friedman and Michael DePalma discuss the drivers behind the run-up in Treasury yields in Q4 and into early January, and how this impacts the opportunity set in fixed income markets. They also touch on the California wildfires, as well as the monetary policy outlook and investment opportunities in the euro area.

It is not my base case that the easing cycle is over, but it is understandable why markets are now pricing in some probability of that outcome. Committee participants marked higher their inflation projections and the policy rate path. And the discussion during the press briefing around the incoming Trump administration implies that the rate path could be marked up further should the trade, immigration and fiscal policy preferences of the new administration come about

In the latest episode of Forward Guidance, Steven Friedman and Michael DePalma discuss their views on how investors can navigate the fixed income market post US election.

In our latest episode of Forward Guidance, Steven Friedman provides a brief synopsis of the November FOMC meeting, including Chair Powell’s slightly dovish press briefing, before offering some early thoughts on the economic implications of the election. There has been much attention on potentially outsized changes to fiscal, trade and immigration policy. But Steven believes some of the polices as implemented will turn out to be more constrained than advertised.

Steven & Michael debate if China's recent policy moves mark a major shift, the US economy's strength post-CPI print and its market implications amid a swift narrative shift from recession to reflation.

Steven & Michael discuss whether a heightened market volatility presages a major outlook shift or will it recede back to normal amid August’s market swings.

Steven & Michael discuss carry environment continuation as easing cycle comes to focus, in relation to housing & investing amidst election uncertainty.

Steven Friedman & Michael, discuss the asymmetric risk profile for Treasury yields and more.

Steven & Michael, provide their outlook for credit markets against a backdrop of solid growth and high interest rates.