🪙The Fed in silent transition: the market anticipates a loosening before 2026

📉The market anticipates "a monetary pivot" from the U.S. Federal Reserve (Fed), even if Jerome Powell does not officially admit it. The rate cut of 25 basis points in September and the more dovish speeches from the governors indicate a beginning of loosening. Some members of the Fed are already calling for stronger cuts.

Why this change?

- The labor market is slowing down.

- Inflation is decreasing but remains high.

- Long-term rates remain high despite monetary tightening.

- Electoral pressure for 2026 is starting to weigh.

🤔Powell's dilemma:

- Lowering too quickly = return of inflation.

- Too slowly = damage to employment.

The market expects a 75 basis point cut

this year, more than what the Fed is announcing. Investors are monitoring Powell's tone, the upcoming CPI data, and the dot plot in December to adjust their strategies.

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