Quarterly Commodities Outlook is available for free now. Download your report →
By: Kathryn Rooney Vera, Managing Director and Chief Market Strategist
Key Takeaways:
The Federal Reserve seems to be backing away from a market-priced, aggressive interest rate cut path. "Two weeks ago, a December cut looked highly likely. It is now a live debate that could go either way," write StoneX senior advisor Jon Hilsenrath and chief market strategist Kathryn Rooney Vera in their latest analysis.
Why the change? The economy isn’t slowing as quickly as was expected. Growth could reach 2.5% this year, far above what the Fed thought possible last year. "Recession didn't happen; neither did much of a slowdown," note the StoneX experts. Instead, "strong October retail sales data and continued low unemployment insurance claim data continue the run of vigorous data."
Fed Chair Jerome Powell's tone has shifted as well. “The economy is not sending any signals that we need to be in a hurry to lower rates,” he said in comments given on November 14. "The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully." Markets largely missed these comments amid election news, but they mark a key change in Fed thinking according to the StoneX team.
Politics add additional wrinkles. Though Powell says, “politics don’t affect Fed decisions,” Republican control of Washington could mean big fiscal policy shifts. "Tax cuts and deregulation without spending reductions could turbocharge an already robust economy and reignite inflation pressures," Hilsenrath and Rooney Vera warn.
The Fed aims to find a "neutral" rate – one that keeps the economy steady. But finding that sweet spot isn't easy. "As Powell often says, nobody knows the neutral rate. It changes over time, depending on economic conditions." After 2008, it stayed under 2% for years. Since 1954, it's averaged closer to 4.25%. Now "the Fed has been working on the hypothesis that the neutral rate is now close to 3%, but it isn't sure."
Markets see the change coming. The two-year Treasury rate has jumped from 3.5% to over 4.25% since September. Traders now expect a slower path to lower rates, with more stops along the way to check how the economy is doing.
For Powell, "the behavior of inflation is like the temperature gauge in a Thanksgiving turkey." With steady inflation and strong growth, the Fed feels no pressure to rush. According to the duo, the big question at present isn't how fast rates will fall. It's whether they will fall at all in December.
Read Kathryn and Jon’s full insights here.
For more in-depth analysis on global market trends and investment strategies, subscribe to "Macro Strategy by Kathryn Rooney Vera.” This comprehensive suite of reports offers expert insights on socio-economic and political trends influencing global markets, authored by StoneX's Chief Market Strategist.
Access NowThe subsidiaries of StoneX Group Inc. provide financial products and services, including, but not limited to, physical commodities, securities, clearing, global payments, risk management, asset management, foreign exchange, and exchange-traded and over-the-counter derivatives. These financial products and services are offered in accordance with the applicable laws in the jurisdictions in which they are provided and are subject to specific terms, conditions, and restrictions contained in the terms of business applicable to each such offering. Not all products and services are available in all countries. The products and services offered by the StoneX Group of companies involve risk of loss and may not be suitable for all investors. Full Disclaimer. This content is not intended for residents of any particular country, and the information herein is not advice nor a recommendation to trade nor does it constitute an offer or solicitation to buy or sell any financial product or service, by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Please refer to the Regulatory Disclosure section for entity-specific disclosures. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc. The information herein is provided for informational purposes only. This information is provided on an ‘as-is’ basis and may contain statements and opinions of the StoneX Group of companies as well as excerpts and/or information from public sources and third parties and no warranty, whether express or implied, is given as to its completeness or accuracy. Each company within the StoneX Group of companies (on its own behalf and on behalf of its directors, employees and agents) disclaims any and all liability as well as any third-party claim that may arise from the accuracy and/or completeness of the information detailed herein, as well as the use of or reliance on this information by the recipient, any member of its group or any third party.
© 2026 StoneX Group Inc. all rights reserved.
Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.
A single negative payrolls print did more than miss expectations, it reset how far the Federal Reserve is expected to move in 2026. With revisions clouding the data and forward guidance fading, the market is left to price the rate path largely on its own.
US ISM manufacturing and services PMIs signal resilient demand, although elevated prices and weaker services employment keep the Fed cautious.
Kevin Warsh's unexpectedly hawkish rhetoric in his debut press conference has challenged assumptions about the future direction of U.S. monetary policy and raised fresh questions about how independent the Federal Reserve can remain when markets come under pressure. As Treasury yields climb and risk assets weaken, investors are increasingly weighing whether inflation control or financial stability will ultimately shape the Federal Reserve's next move.
Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.
Reach
With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bi-lateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.
Transparency
As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve; our financials and record of accomplishment are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.
Expertise
From our proprietary Market Intelligence platform, to “boots on the ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.
