The market is sending the Fed a very different message than it was months ago.
Back in early 2025, investors were aggressively pricing in multiple rate cuts: some even betting on 4-5 by the end of the year.
Soft landing euphoria was in full swing.
Fast forward to now: Markets are pricing in just a 21% chance of even a single cut in 2026. That’s a complete rewrite of the economic narrative.
What changed?
Stronger-than-expected growth, resilient consumer spending, sticky services inflation, and a labor market that refuses to crack.
Investors are now betting the economy can handle “higher for longer” rates without breaking.
This shift is huge for everything from mortgage rates and corporate borrowing to the stock market’s valuation reset.
It suggests the Fed might not ride to the rescue as quickly as bulls hoped, forcing companies and consumers to adapt to a higher cost of capital world.
The bond market is recalibrating to a stronger, hotter economy than predicted.
Are we finally entering the “no landing” scenario? Or is this just another temporary repricing?
The data will decide.
Source:
@KobeissiLetter
/ Writer: Val
The market is sending the Fed a very different message than it was months ago.
Back in early 2025, investors were aggressively pricing in multiple rate cuts: some even betting on 4-5 by the end of the year.
Soft landing euphoria was in full swing.
Fast forward to now: Markets… pic.twitter.com/5o2ACDVTCd
— Mario Nawfal (@MarioNawfal) July 7, 2026
Higher rates stick around as new normal. Companies and consumers must adapt to expensive capital.