⏱ 3 min read
Respondents back a pause now, a December hike next and more tightening next year, the report says.
A survey of 30 fund managers, strategists and economists points to a pause at this week’s Federal Reserve meeting and a Fed survey December hike as the base case, according to the report. It says 93% of respondents expect no move now, 76% see a hike in December, and more than half expect about two hikes next year.
Asked what the Fed should do this week, 30% told the report the central bank should raise now. Respondents also expect at least two voting members to dissent if the Committee holds. A pause leaves the policy rate unchanged for one meeting; a subsequent hike would tighten conditions from today’s level.
Views diverge on timing and risks. Richard Bernstein, global head of macro investing at Janus Henderson Investors, said, “Their hesitancy to raise rates is unfathomable after an extended period of monetary and fiscal generosity, with nominal GDP running 6-8%, and when the leading indicators of inflation are uniformly warm to hot.” Mark Zandi, chief economist at Moody’s Analytics, countered, “This isn’t the time for more Fed rate hikes.”
Respondents in aggregate see inflation pressures as broader than energy. The report says 70% view the problem as more than oil. It adds that the U.S. crude benchmark is forecast at $88 a barrel in six months, up from $82 in the prior survey but below the current $101, a $13 gap that would tend to pull headline inflation lower if realized. The Consumer Price Index is projected to ease to 3.6% from September’s 3.7%, then fall to 2.6% next year.
Growth is still seen running above potential. The report puts GDP at 2.4% this year, 2.05% in 2025 and 2.2% in 2027. It says respondents assign a 26% probability to a recession in the next year, down 3 percentage points from 29% in the last survey.
Higher yields seen persisting near term
On rates, the report says respondents attribute elevated Treasury yields in roughly equal measure to high inflation, strong growth, heavy debt issuance and expectations for a higher policy rate. On supply specifically, 50% cited government borrowing as the larger driver, 13% cited debt to fund AI buildouts, and a third said both contributed equally. On average, the 10-year yield is seen staying above 5% this year and dipping to 4.8% in 2027. “With stubborn inflation amid energy and trade pressures… benchmark U.S. Treasury bond yields above 5% represent a new band, not an anomaly,” wrote Subodh Kumar of Subodh Kumar & Associates.
Election and policy risks
The report says 63% see market risk from potential legal challenges that could prolong uncertainty over control of Congress after next week’s election. More than half judge unified Democratic control as the most likely outcome, while 40% expect Democrats to control the House but not the Senate. Most foresee little change in individual or corporate taxes, though 41% expect higher deficits regardless of which party prevails.
The next decision point is this week’s Fed meeting, with respondents expecting a hold and possible dissents, followed by a likely move in December.
Source: CNBC.
This article was written with AI assistance and reviewed by an editor.
This content is for informational purposes only and does not constitute financial advice.
🧠 HafidWatch Take
Despite expectations for tighter Fed policy, the projected rise in the S&P 500 suggests confidence that earnings and economic growth will remain resilient. However, this outlook could mask sector-specific vulnerabilities, where some industries may underperform even if the overall index moves higher. Investors should consider that these projections hinge on sustained corporate profitability amid ongoing policy and election uncertainties.
Daily crypto intelligence. Before the market opens.
Including the Divergence Index — the sentiment gap no other newsletter tracks. Free, every morning at 7:30am ET.
✓ Free forever · ✓ No spam · ✓ 50+ sources monitored
