Market expectations of two interest rate cuts, but BlackRock pours cold water: The Fed is unlikely to take major action in 2026.
This is a classic divergence between "market expectations" and "professional judgment of large institutions," reflecting the high uncertainty in the current macro environment.
Insights for investors:
Market expectations change rapidly, and asset prices may have already priced in too much anticipation of rate cuts. Caution is needed regarding market volatility resulting from unmet expectations.
In asset allocation, one should fully consider the long-term environment of rising interest rate centrality. The attractiveness of cash-like assets and short-term bonds will last longer.
Every future inflation and employment data point will be key to triggering market volatility, as this will directly impact the Fed's decision-making pace.
Their viewpoint reminds us that the macro landscape in the post-pandemic era has changed, and it cannot simply be modeled using past cycle patterns.
In summary, the market's focus is on "when to start cutting rates," while BlackRock's perspective is on "the magnitude and endpoint of the rate cut cycle." The divergence between the two reveals the current core contradiction: what we may face is not a standard, recession-driven rapid rate cut cycle, but a slow and uncertain normalization process of monetary policy due to stubborn inflation. The judgment that there is "unlikely to be major action in 2026" is based on the expectation of this slow process.