Key Takeaways:
Powered by lumidawealth.com
• JPMorgan now forecasts two quarter-point cuts — one in December and another in January.
• View shifts after dovish messaging from New York Fed President John Williams.
• Swaps market aligns with the call, pricing ~80% odds of a December cut (up from ~30% last week).
• December FOMC meeting now viewed as a close but rate-cut-leaning decision.
What Happened?
JPMorgan has flipped its outlook and now expects the Federal Reserve to begin cutting rates in December rather than January. The shift follows supportive commentary from Fed officials — particularly John Williams — which signaled greater openness to near-term easing. This comes just days after JPMorgan had shifted toward expecting a pause following delayed September labor data. Markets have since quickly realigned, with swap contracts reflecting strong conviction that cuts could begin at the upcoming Dec. 9–10 meeting.
Why It Matters?
The pivot underscores how sensitive policy expectations are to Fed communication, especially amid mixed employment signals and uncertainty in economic momentum. A December cut would indicate the Fed believes inflation risks have receded enough to prioritize growth stability. It also strengthens the near-term bullish case for risk assets — supporting equities, easing credit conditions, and potentially weakening the dollar. A dual-cut sequence (Dec + Jan) would meaningfully define the early-2026 macro backdrop.
What’s Next?
Investors now watch upcoming Fedspeak and economic data for confirmation, as the decision remains finely balanced. The December meeting is expected to be market-moving, particularly if the Fed signals a sustained easing cycle rather than a one-off cut. A miss in labor or inflation prints could still alter probabilities, but momentum is clearly shifting toward policy accommodation.
