JPMorgan updates Fed interest rate cut outlook

That seems highly likely. With rates persisting at current level, or perhaps even ticking up, don't expect any heady gains in the bond market, or in small-cap stocks. I expect the malaise in both to continue indefinitely.
 
Nothing new here. I've assumed no rate cuts for a while. Caution is good, I think.
 
At the risk of sounding snarky, who cares? These "experts" that make predictions are often wrong. They make headlines for a day or two, arent held accountable, and don't bring any value to my investment strategy.
 
MichaelB said:
Would you mind giving us at least a quick summary?
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He expects fixed income returns to average about 5% over the next five years.

three key reasons why interest rates are likely to remain elevated:
- Inflation is still too high
- Global debt is pushing up long-term rate
- The Fed’s credibility is on the line
 
Earl E Retyre said:
three key reasons why interest rates are likely to remain elevated:
- Inflation is still too high
Click to expand...
Inflation is too high at latest PCE numbers of?

1748873698006.png


We have been spoiled.

Flieger
 
With our government debt as high as it is, I don't expect either short term or long term interest rates to drop very far, if at all.

Mortgage rates are stuck at around 7% and the housing market is frozen solid (most of U.S.) and until housing prices come down, sales will be stalled.
 
Earl E Retyre said:
He expects fixed income returns to average about 5% over the next five years.

three key reasons why interest rates are likely to remain elevated:
- Inflation is still too high
- Global debt is pushing up long-term rate
- The Fed’s credibility is on the line
Click to expand...
Thank you
 
I think the current administration will focus on lowering rates. Bessent has said he is focused on reducing long term rates. Not sure what that entails, but the cost of servicing our debt is skyrocketing with higher rates and they have to figure out something. I am sure the treasury feels the pain every auction.
 
surprising said:
I think the current administration will focus on lowering rates. Bessent has said he is focused on reducing long term rates. Not sure what that entails, but the cost of servicing our debt is skyrocketing with higher rates and they have to figure out something. I am sure the treasury feels the pain every auction
Click to expand...

Not easy to do as those rates are market based and influenced by a lot of macroeconomic factors. When the FED lowered short term rates last Fall, the long rates actually went up!
 
It's called 'The Horns of a Dilemma" when two choices each have unfavorable consequences.

If the Fed keeps rates where they are, the economy stays stagnant -- maybe inflation comes down a tick....but the Housing sector (nearly 20% of GDP) is locked up tight.

If the Fed lowers rates, the economy might perk up. But the US might also find it difficult to attract buyers of our debt. We might lose status as the Global Reserve Currency.....a title China or the EU would love to call it's own.
 
I have never followed predictions since 2000 because these "experts" have been so wrong for so long, and that is why I documented them for years. See (link).
I based my funds on current markets, and since 2017, it's mainly bond funds.
My question is always, how do I make money at any given time?
I sold it all in Mid March(link), and bought back in Mid-April(link).
Several funds have worked since Mid-April. Look at CLOZ and EGRIX.

The best place to watch future rates is on https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
It looks like there is going to be one rate cut in the next several months. I just ignore it.
 
rthiru said:
https://www.thestreet.com/personal-finance/jpmorgan-updates-fed-interest-rate-cut-outlook-

Looks like this is in conflict with what most are expecting the Fed to do.
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Hi. I'm not sure it's in conflict ---- I think Fed is happy here UNTIL inflation or employment move. And frankly, I think almost all economists share that pretty uninspiring view. So predictions about Fed policy moves just depend on the narrative one thinks will emerge from the big cloudy tariff-inflation unknown. A smart strategist from Wilmington Trust (Dupont money!) thinks 4 cuts THIS YEAR because unemployment will rise and ultimate tariff effects on inflation --- when the BS clears --- will be limited and won't last long. JPM sees the ECONOMY AND INFLATION differently ---- and I think they're all just guessing at this point. I mean, how can one be confident in a tariff-dependent prediction when the scope of tariffs is completely unknown?
Regards, Dick
 
Yes, "just" hitting the so-called inflation target doesn't automatically mean the FED is going to loosen things up. I'd rather wait until inflation gets lower still. The FED can always cut the rate if there's any hint of a recession.
 
Koolau said:
Yes, "just" hitting the so-called inflation target doesn't automatically mean the FED is going to loosen things up. I'd rather wait until inflation gets lower still. The FED can always cut the rate if there's any hint of a recession.
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Good jobs numbers means no recession:

The number of workers who were hired by the private sector in April jumped by 160,000 from March, to 5.21 million hires, the most in a year, seasonally adjusted. The low point was in June 2024 (blue line in the chart).

The three-month average, which irons out the month-to-month squiggles and revisions, jumped by 72,000 in April from March, to 5.10 million private-sector hires, the highest in 11 months. So far this year, the trend is clearly up (red line in the chart).
Click to expand...

 
aja8888 said:
With our government debt as high as it is, I don't expect either short term or long term interest rates to drop very far, if at all.

Mortgage rates are stuck at around 7% and the housing market is frozen solid (most of U.S.) and until housing prices come down, sales will be stalled.
Click to expand...
I dunno. We bought our Texas home in March 2024 and closed on our Florida condo in June 2024. DD and DSIL bought in March 2025 and sold in May 2025. Real estate markets are far from frozen based on our family's experiences.
 
pb4uski said:
I dunno. We bought our Texas home in March 2024 and closed on our Florida condo in June 2024. DD and DSIL bought in March 2025 and sold in May 2025. Real estate markets are far from frozen based on our family's experiences.
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Your family did well. as we all know, real estate is local and some areas always do better than others.

Around here, houses for sale are not moving. Builders are building thousands of them (true) currently discounting 10% off new price and throwing in other incentives. Even still, there are at least a dozen in a 1/4 mile of me sitting empty since before Christmas. Of course, if the seller lowers the price enough, there will be a buyer. Here's the national look:



Pending Home Sales Plunge in All Regions, Inventories Surge. In the West & South, Collapsed Sales Meet Spiking Inventories​


Pending home sales, a forward-looking indicator of “closed sales” of existing homes, plunged by 6.3% in April from March, seasonally adjusted, according to data from the National Association of Realtors today, driven by even bigger plunges in the South and the West, with the West carving out new lows in the data, just as inventories for sale are piling up.

Compared to the Aprils in prior years (historic data via YCharts):

  • 2024: -2.5%
  • 2023: -8.7%
  • 2022: -28.0%%
  • 2021: -34.8%
  • 2020: -0.1% (lockdown April)
  • 2019: -31.6%.
US-pending-home-sales-2025-05-29-overall.png
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The Fed is walking a tight line between interest rate cute, inflation and QE. Hopefuly whatever they do will be "transitory".
 
IMO only the terminally naive have missed the fact that government financial data gatherer and reporter agencies are being strangled under the cover of budget cuts. When embarrassingly low survey response rates are not supplemented by staff research, the data that guide fiscal and monetary policy are less reliable and perhaps suspect. One reason I'm generally bullish on fixed Income products is my near certainty that inflation and employment data releases will support arguments for lower policy rates.
Regards, Dick
 
Not sure that I get the last part. If inflation increases I would think they would keep rates as is or even raise rates. Are you thinking that inflation has plateaued?
 
pb4uski said:
Not sure that I get the last part. If inflation increases I would think they would keep rates as is or even raise rates. Are you thinking that inflation has plateaued?
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No way to know for certain, but the trend has been toward stable at our around 2%. YMMV
 
That's what I'm seeing too. So if inflation is stable then I could see them lowering rates only if unemployment increased, to try to increase employment.
 
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