Macro Memo: Hawkish Dovishness

Soft Landing on Track and the Fed Cuts in December

• Given the economic and political uncertainties ahead, the Fed and Chair Powell will favor a strategy of sounding hawkish while acting dovish. We expect the Fed to continue to gradually cut rates, but to do it with the threat of pausing at any moment.

  • Powell’s own comments confirm our original framework that predicted the 50bps cut - they were focused on arresting negative momentum before it got uncontrollable. Their strategy worked perfectly.