As 2025 draws to a close, global financial markets are fixated on the Federal Open Market Committee (FOMC) meeting scheduled for December 9-10. This is not only the final monetary policy decision of the year but also an unprecedented instance of "flying blind" for the Federal Reserve, occurring against the backdrop of a 43-day federal government shutdown that has severed the flow of official economic data.

Based on the current complex macroeconomic environment, private sector alternative data, public statements from FOMC members, and historical monetary policy cycles, this report provides a detailed projection of the meeting's outcome and the policy path for 2026. Key takeaways include:

December Decision Forecast: Despite lingering inflation stickiness, the Fed is highly likely (87%-90% probability) to lower the federal funds rate target range by 25 basis points to 3.50%-3.75%, driven by alarming signals of labor market deterioration (specifically the collapse in ADP private payrolls). This will likely be framed as a "risk management" insurance cut.
2026 Pause Signal: We project the Fed will signal a "pause" via its policy statement or the Dot Plot. Constrained by structural inflation pressures, potential reflationary fiscal policies from the incoming Trump administration (tariffs and tax cuts), and a systematic rise in the neutral rate (R-star), the Fed may significantly slow or halt rate cuts in 2026, defying market expectations for aggressive easing.
Internal Divergence: The FOMC is experiencing its most significant division in years. The dovish camp fears a labor market freeze, while the hawkish camp insists the inflation fight is unfinished. We expect multiple dissenting votes, highlighting a fracture in consensus.
Investment Strategy: Investors should re-evaluate asset allocation for a "Cut then Pause" scenario. Bond markets require caution regarding long-end yield rebounds; equity markets should pivot toward defensive and quality factors; and cash management should prioritize locking in high yields before the window closes.

December FOMC Preview: Critical Decisions in the Fog

Context: An Unprecedented Data Vacuum

The December 2025 FOMC meeting holds a unique place in modern Fed history. Due to the longest federal government shutdown in history (43 days), data publication systems at the Bureau of Labor Statistics (BLS) and Bureau of Economic Analysis (BEA) have been paralyzed. Consequently, the Fed has lost its primary navigational instruments—official Non-Farm Payrolls (NFP), CPI, and PCE data are either significantly delayed or missing entirely.

Typically emphasizing "Data Dependence," the Fed is now forced to rely on "Private Data Dependence" or model extrapolation. This uncertainty heightens policy risk:

Risk of Acting Too Early: If private data exaggerates economic weakness, cutting rates could reignite inflation.
Risk of Acting Too Late: If the economy has already slipped into recession (as suggested by the Sahm Rule), the lack of official data could cause the Fed to miss the window for rescue.

Core Prediction: The Inevitability of a 25 bps Cut

Despite the data void, a synthesis of available information points to a 25 basis point cut on December 10.

Projection Item	Forecast Content	Confidence	Source/Basis
Rate Decision	Cut 25 bps (to 3.50%-3.75%)	High (90%)	CME FedWatch, IB Consensus
Dot Plot (2026)	Median shows only ~2 cuts in 2026	Medium	Sticky inflation, Bank Outlooks
Economic Outlook (SEP)	Lower GDP, Higher Unemployment Forecasts	High	ADP plunge, Weak Manufacturing
Dissenting Votes	2-3 Dissenters expected (Hawkish)	Med-High	FOMC Division

Rationale: Labor Market "Red Light"

In the absence of official NFP data, the ADP National Employment Report has become the market's focal point. November data showed the private sector unexpectedly shed 32,000 jobs. This is the worst performance since the onset of the pandemic, with small businesses (fewer than 50 employees) shedding 120,000 jobs.

Small Business Bellwether: Small businesses are often leading indicators of the economic cycle, being most sensitive to cash flow and financing costs. The massive layoffs revealed by ADP suggest the lagged effects of high interest rates are hitting home. The Fed must react to prevent a "negative feedback loop" where layoffs dampen consumption, leading to further layoffs.
Sahm Rule Shadow: Although the official unemployment rate was last recorded at 4.4% in September, it has risen more than 0.5 percentage points from its cycle low, triggering the "Sahm Rule" recession indicator. Lacking contradictory official data, the Fed is likely to adopt a "least regret" strategy—assuming recession risk is real and cutting rates.

Rationale: Restrictive Real Rates

Even after cuts in September and October, the nominal federal funds rate remains near 4.00%. With inflation (Core PCE) retreating to around 2.8%, the real interest rate is approximately 1.2%.

Many economists estimate the neutral real rate (r*) to be between 0.5%-1.0%. This implies current policy remains restrictive. Amid signs of slowing growth, maintaining restrictive rates is difficult to justify. A 25 bps cut acts to normalize policy rather than purely stimulate, preventing real rates from passively tightening as inflation falls.

Why Not 50 Basis Points?

Despite dire employment signals, a 50 bps cut is unlikely because:

Inflation Miss: Inflation remains significantly above the 2% target (Core PCE 2.8%, Sticky CPI 3.3%). A jumbo cut could signal surrender on inflation, unanchoring long-term expectations.
Data Reliability: Reacting aggressively to a single private ADP report is politically and strategically risky. If subsequent official data revises the ADP figures upward, the Fed would face a credibility crisis.
Political Optics: During a sensitive power transition, an overly aggressive cut could invite scrutiny from President-elect Trump or Congress.

The 2026 Policy Path: Why the Fed May "Cut then Pause"

Markets are currently pricing in multiple cuts for 2026, reflecting inertial thinking. However, deeper analysis suggests the Fed may signal a "Pause" or "Skip" strategy early in 2026.

The "Last Mile" Problem of Structural Inflation

Reducing inflation from 9% to 3% was facilitated by supply chain repairs and base effects. The "last mile" from 3% to 2% is proving far more arduous.

Housing Stickiness: The Atlanta Fed’s Sticky-Price CPI shows inflation for infrequent price-changers remains at 3.3%. While market rents have slowed, this has not fully transmitted to the official CPI housing component.
Service Sector: Core service inflation (supercore) correlates highly with wage growth. While the labor market is cooling, wages have not collapsed, keeping pressure on labor-intensive service prices.

If inflation hovers in the 2.5%-3.0% range in early 2026, the Fed loses the justification for further cuts. Hawks like Governor Waller have warned that the risk of re-acceleration demands patience.

Trumponomics and Reflation

Monetary policy in 2026 will be heavily influenced by fiscal policy. The incoming Trump administration's economic agenda is distinctively reflationary.

Tariff Shock: Proposals for broad tariffs (specifically 60% on certain nations) act as a supply shock. Goldman Sachs (GS) economists note that the one-time price effects could materialize in mid-2026, directly lifting CPI. While central banks theoretically look through one-off shocks, rising inflation expectations may force the Fed to hold rates higher.
Deficits and Tax Cuts: Extending 2017 tax cuts or introducing new corporate relief stimulates demand. With unemployment not yet at crisis levels (4.4%), additional fiscal stimulus could crowd out resources and push prices up. Morgan Stanley (MS) notes this pro-cyclical expansion reduces the need for monetary easing.

The Systematic Rise of R-star

The academic debate over R-star (neutral rate) is becoming policy reality.

Re-evaluation: Pre-pandemic, the long-run neutral nominal rate was viewed as ~2.5%. However, AI-driven productivity gains, green energy capex, and resilient consumption suggest the neutral rate has risen.
Policy Implication: If the true neutral rate is now 3.0%-3.5%, current rates are not as restrictive as believed. The Fed may conclude its cutting cycle at 3.50%-3.75% (the level after December's cut), deeming the job done and pausing in 2026.

Historical Precedents: 1995 & 1998 "Insurance Cuts"

Fed history is not binary (hike vs. cut). There are precedents for "fine-tuning":

1995-1996: Alan Greenspan executed three cuts (75 bps total) during a soft landing, then paused for years.
1998: The Fed cut rapidly three times during the LTCM/Asian Financial Crisis, then stopped.

The current environment (slowing but not crashing economy, controlled but above-target inflation) mirrors 1995. The Fed may define the late 2025 cuts as a "Mid-Cycle Adjustment" rather than the start of a long easing cycle.

Internal Divisions: Hawks vs. Doves

Consensus within the FOMC has fractured. The interplay between three factions will determine the December statement and Dot Plot.

The Core Disagreement

The split centers on the "Dual Mandate" priority:

Inflation First (Hawks): Fear premature easing will repeat the "Stop-and-Go" errors of the 1970s.
Employment First (Doves): Believe inflation is tamed and priority must shift to preventing a labor market spiral.

Faction Analysis

Camp	Key Figures (Inferred/Known)	Stance & Rationale	Dec Meeting Position
Hawks	Bowman, Barkin, Schmid	Inflation Risk > Employment Risk. Skeptical of ADP data; focused on sticky CPI/PCE. Believe rates should stay higher for longer.	Dissent (Vote against cut), or demand higher Dot Plot path.
Centrists	Powell, Williams, Waller	Risk Management. Acknowledge labor cooling risks but won't declare victory on inflation. Favor "Hawkish Cut"—cut now, talk tough.	Support 25bps cut, but emphasize data dependence and "Pause" optionality.
Doves	Goolsbee, Daly	Employment Risk > Inflation Risk. Concerned by Sahm Rule and small business collapse seen in ADP.	Strongly Support Cut, potentially argued for 50bps, project more cuts in 2026.

Significance of Dissent

Signal of Inflection: Market forecasts suggest up to 3 dissenting votes. The Powell era has been marked by high consensus; a fracture of this magnitude signals a policy inflection point, indicating the future path will be non-linear and volatile.

Macro Theory: The Triangle of Rates, Jobs, and Inflation

Understanding the Fed's dilemma requires examining anomalies in standard macroeconomic relationships.

The Flattening and Steepening Phillips Curve

Beveridge Curve Shift: Previously, job openings (JOLTS) fell without spiking unemployment—a "soft landing" path. That phase is over. With openings normalized, further labor demand reduction now directly translates to higher unemployment (steepening Phillips Curve). The ADP deterioration confirms this inflection.
Supply-Side Inflation: Current inflation is partly supply-driven (housing shortages, deglobalization costs). Fighting this with rates (demand suppression) has a high "Sacrifice Ratio" (unemployment cost), which Doves are eager to avoid.

Lagged and "K-Shaped" Transmission

Locked-in Rates: Many households locked in low 30-year mortgages, insulating them from rate hikes. This explains resilient spending (Visa Inc (V)/Mastercard (MA) data) despite high rates.
K-Shaped Impact: High rates disproportionately crush floating-rate dependent small businesses (ADP job losses) and lower-income consumers (credit defaults), while cash-rich large corps and wealthy households benefit from high interest income. This structural divergence explains the contradictory data: GDP holds up (driven by large firms) while sentiment and small business hiring collapse.

Investment Strategy for Individual Investors

Based on the "December Cut, 2026 Pause" baseline, investors should avoid the linear "Cut = Bull Market" narrative and adopt a defensive, nuanced approach.

Fixed Income: Duration & Laddering

Logic: If the Fed pauses in 2026 and fiscal policy lifts inflation expectations, long-end yields (10y, 30y) could rebound due to "Term Premium" pricing.

Avoid Excessive Duration: Do not go all-in on 20+ year Treasuries. If the 10-year yield rebounds to 4.5%, long bonds will suffer price declines.
Target the "Belly": The 5-year tenor is the sweet spot, benefiting from near-term cuts while carrying less inflation risk than long bonds.
Bond Ladder: Build a ladder (1y, 2y, 3y, 5y) to secure current high yields while maintaining flexibility for reinvestment if rates fluctuate.

Equities: Quality Over Speculation

Logic: "Higher for Longer" in 2026 implies sustained financing pressure. Unprofitable growth stocks dependent on cheap money face valuation compression.

Quality Factor: Focus on companies with healthy balance sheets, strong cash flow, and low leverage. These firms can thrive and buy back stock even with rates at 4%.
Sector Rotation:
- Utilities: AI data center power demand adds a growth layer to this defensive, dividend-paying sector.
- Financials: A steeper yield curve (long rates > short rates) improves net interest margins. Deregulation under Trump is also a tailwind.
- Industrials: Beneficiaries of fiscal spending and manufacturing reshoring.

Cash Management: Lock in the Window

Logic: The December cut is the starting gun for falling deposit rates.

CD Locking: Before the Dec 10 meeting, lock in CD rates of 4.0%-4.5%. Target 12-18 month maturities to bridge the potential 2026 cutting/pause cycle.
High Yield Savings (HYSA): Monitor bank rate adjustments closely and be ready to move funds to competitive institutions.

Real Estate & Mortgages

Logic: Mortgage rates are unlikely to return to 3%. Expect them to oscillate near 6% in 2026.

Buy vs. Wait: Do not defer essential purchases solely in hopes of a rate crash. Prices remain firm due to supply constraints. Affordability calculations should assume ~6% rates.

Sources

ADP Research Institute - ADP National Employment Report: Private Sector Employment November 2025 Data
Federal Reserve Board - Governor Christopher J. Waller: The Case for Continuing Rate Cuts November 17, 2025
CME Group - CME FedWatch Tool December 2025 Rate Probabilities
Federal Reserve Bank of Atlanta - Sticky-Price CPI October 2025 Data
Goldman Sachs - The Outlook for Fed Rate Cuts in 2026 Global Views Report
Morgan Stanley - 2026 Investment Outlook: The BEAT December 2025
J.P. Morgan Asset Management - 2026 Year-Ahead Investment Outlook - December 2025
PIMCO - Charting the Year Ahead: Investment Ideas for 2026 December 3, 2025
BlackRock - Fed rate cuts and potential portfolio implications September 2025
The Conference Board - Fed Meeting Preview: December 2025 December 2025
Bank of America Institute - Consumer Checkpoint: Holiday Prep or Schlep? November 12, 2025
Indeed Hiring Lab - US Labor Market Trends Chartbook: November 2025 November 2025
Mastercard - SpendingPulse: U.S. Black Friday Retail Sales November 29, 2025
Visa - Spending Momentum Index November 2025
International Monetary Fund - Alternative Data and Monetary Policy by Claudia Sahm December 2025

December Decision Forecast: Despite lingering inflation stickiness, the Fed is highly likely (87%-90% probability) to lower the federal funds rate target range by 25 basis points to 3.50%-3.75%, driven by alarming signals of labor market deterioration (specifically the collapse in ADP private payrolls). This will likely be framed as a "risk management" insurance cut.
2026 Pause Signal: We project the Fed will signal a "pause" via its policy statement or the Dot Plot. Constrained by structural inflation pressures, potential reflationary fiscal policies from the incoming Trump administration (tariffs and tax cuts), and a systematic rise in the neutral rate (R-star), the Fed may significantly slow or halt rate cuts in 2026, defying market expectations for aggressive easing.
Internal Divergence: The FOMC is experiencing its most significant division in years. The dovish camp fears a labor market freeze, while the hawkish camp insists the inflation fight is unfinished. We expect multiple dissenting votes, highlighting a fracture in consensus.
Investment Strategy: Investors should re-evaluate asset allocation for a "Cut then Pause" scenario. Bond markets require caution regarding long-end yield rebounds; equity markets should pivot toward defensive and quality factors; and cash management should prioritize locking in high yields before the window closes.

December FOMC Preview: Critical Decisions in the Fog

Context: An Unprecedented Data Vacuum

Typically emphasizing "Data Dependence," the Fed is now forced to rely on "Private Data Dependence" or model extrapolation. This uncertainty heightens policy risk:

Risk of Acting Too Early: If private data exaggerates economic weakness, cutting rates could reignite inflation.
Risk of Acting Too Late: If the economy has already slipped into recession (as suggested by the Sahm Rule), the lack of official data could cause the Fed to miss the window for rescue.

Core Prediction: The Inevitability of a 25 bps Cut

Despite the data void, a synthesis of available information points to a 25 basis point cut on December 10.

Projection Item	Forecast Content	Confidence	Source/Basis
Rate Decision	Cut 25 bps (to 3.50%-3.75%)	High (90%)	CME FedWatch, IB Consensus
Dot Plot (2026)	Median shows only ~2 cuts in 2026	Medium	Sticky inflation, Bank Outlooks
Economic Outlook (SEP)	Lower GDP, Higher Unemployment Forecasts	High	ADP plunge, Weak Manufacturing
Dissenting Votes	2-3 Dissenters expected (Hawkish)	Med-High	FOMC Division

Rationale: Labor Market "Red Light"

Small Business Bellwether: Small businesses are often leading indicators of the economic cycle, being most sensitive to cash flow and financing costs. The massive layoffs revealed by ADP suggest the lagged effects of high interest rates are hitting home. The Fed must react to prevent a "negative feedback loop" where layoffs dampen consumption, leading to further layoffs.
Sahm Rule Shadow: Although the official unemployment rate was last recorded at 4.4% in September, it has risen more than 0.5 percentage points from its cycle low, triggering the "Sahm Rule" recession indicator. Lacking contradictory official data, the Fed is likely to adopt a "least regret" strategy—assuming recession risk is real and cutting rates.

Rationale: Restrictive Real Rates

Even after cuts in September and October, the nominal federal funds rate remains near 4.00%. With inflation (Core PCE) retreating to around 2.8%, the real interest rate is approximately 1.2%.

Why Not 50 Basis Points?

Despite dire employment signals, a 50 bps cut is unlikely because:

Inflation Miss: Inflation remains significantly above the 2% target (Core PCE 2.8%, Sticky CPI 3.3%). A jumbo cut could signal surrender on inflation, unanchoring long-term expectations.
Data Reliability: Reacting aggressively to a single private ADP report is politically and strategically risky. If subsequent official data revises the ADP figures upward, the Fed would face a credibility crisis.
Political Optics: During a sensitive power transition, an overly aggressive cut could invite scrutiny from President-elect Trump or Congress.

The 2026 Policy Path: Why the Fed May "Cut then Pause"

Markets are currently pricing in multiple cuts for 2026, reflecting inertial thinking. However, deeper analysis suggests the Fed may signal a "Pause" or "Skip" strategy early in 2026.

The "Last Mile" Problem of Structural Inflation

Reducing inflation from 9% to 3% was facilitated by supply chain repairs and base effects. The "last mile" from 3% to 2% is proving far more arduous.

Housing Stickiness: The Atlanta Fed’s Sticky-Price CPI shows inflation for infrequent price-changers remains at 3.3%. While market rents have slowed, this has not fully transmitted to the official CPI housing component.
Service Sector: Core service inflation (supercore) correlates highly with wage growth. While the labor market is cooling, wages have not collapsed, keeping pressure on labor-intensive service prices.

If inflation hovers in the 2.5%-3.0% range in early 2026, the Fed loses the justification for further cuts. Hawks like Governor Waller have warned that the risk of re-acceleration demands patience.

Trumponomics and Reflation

Monetary policy in 2026 will be heavily influenced by fiscal policy. The incoming Trump administration's economic agenda is distinctively reflationary.

Tariff Shock: Proposals for broad tariffs (specifically 60% on certain nations) act as a supply shock. Goldman Sachs (GS) economists note that the one-time price effects could materialize in mid-2026, directly lifting CPI. While central banks theoretically look through one-off shocks, rising inflation expectations may force the Fed to hold rates higher.
Deficits and Tax Cuts: Extending 2017 tax cuts or introducing new corporate relief stimulates demand. With unemployment not yet at crisis levels (4.4%), additional fiscal stimulus could crowd out resources and push prices up. Morgan Stanley (MS) notes this pro-cyclical expansion reduces the need for monetary easing.

The Systematic Rise of R-star

The academic debate over R-star (neutral rate) is becoming policy reality.

Re-evaluation: Pre-pandemic, the long-run neutral nominal rate was viewed as ~2.5%. However, AI-driven productivity gains, green energy capex, and resilient consumption suggest the neutral rate has risen.
Policy Implication: If the true neutral rate is now 3.0%-3.5%, current rates are not as restrictive as believed. The Fed may conclude its cutting cycle at 3.50%-3.75% (the level after December's cut), deeming the job done and pausing in 2026.

Historical Precedents: 1995 & 1998 "Insurance Cuts"

Fed history is not binary (hike vs. cut). There are precedents for "fine-tuning":

1995-1996: Alan Greenspan executed three cuts (75 bps total) during a soft landing, then paused for years.
1998: The Fed cut rapidly three times during the LTCM/Asian Financial Crisis, then stopped.

Internal Divisions: Hawks vs. Doves

Consensus within the FOMC has fractured. The interplay between three factions will determine the December statement and Dot Plot.

The Core Disagreement

The split centers on the "Dual Mandate" priority:

Inflation First (Hawks): Fear premature easing will repeat the "Stop-and-Go" errors of the 1970s.
Employment First (Doves): Believe inflation is tamed and priority must shift to preventing a labor market spiral.

Faction Analysis

Camp	Key Figures (Inferred/Known)	Stance & Rationale	Dec Meeting Position
Hawks	Bowman, Barkin, Schmid	Inflation Risk > Employment Risk. Skeptical of ADP data; focused on sticky CPI/PCE. Believe rates should stay higher for longer.	Dissent (Vote against cut), or demand higher Dot Plot path.
Centrists	Powell, Williams, Waller	Risk Management. Acknowledge labor cooling risks but won't declare victory on inflation. Favor "Hawkish Cut"—cut now, talk tough.	Support 25bps cut, but emphasize data dependence and "Pause" optionality.
Doves	Goolsbee, Daly	Employment Risk > Inflation Risk. Concerned by Sahm Rule and small business collapse seen in ADP.	Strongly Support Cut, potentially argued for 50bps, project more cuts in 2026.

Significance of Dissent

Signal of Inflection: Market forecasts suggest up to 3 dissenting votes. The Powell era has been marked by high consensus; a fracture of this magnitude signals a policy inflection point, indicating the future path will be non-linear and volatile.

Macro Theory: The Triangle of Rates, Jobs, and Inflation

Understanding the Fed's dilemma requires examining anomalies in standard macroeconomic relationships.

The Flattening and Steepening Phillips Curve

Beveridge Curve Shift: Previously, job openings (JOLTS) fell without spiking unemployment—a "soft landing" path. That phase is over. With openings normalized, further labor demand reduction now directly translates to higher unemployment (steepening Phillips Curve). The ADP deterioration confirms this inflection.
Supply-Side Inflation: Current inflation is partly supply-driven (housing shortages, deglobalization costs). Fighting this with rates (demand suppression) has a high "Sacrifice Ratio" (unemployment cost), which Doves are eager to avoid.

Lagged and "K-Shaped" Transmission

Locked-in Rates: Many households locked in low 30-year mortgages, insulating them from rate hikes. This explains resilient spending (Visa Inc (V)/Mastercard (MA) data) despite high rates.
K-Shaped Impact: High rates disproportionately crush floating-rate dependent small businesses (ADP job losses) and lower-income consumers (credit defaults), while cash-rich large corps and wealthy households benefit from high interest income. This structural divergence explains the contradictory data: GDP holds up (driven by large firms) while sentiment and small business hiring collapse.

Investment Strategy for Individual Investors

Based on the "December Cut, 2026 Pause" baseline, investors should avoid the linear "Cut = Bull Market" narrative and adopt a defensive, nuanced approach.

Fixed Income: Duration & Laddering

Logic: If the Fed pauses in 2026 and fiscal policy lifts inflation expectations, long-end yields (10y, 30y) could rebound due to "Term Premium" pricing.

Avoid Excessive Duration: Do not go all-in on 20+ year Treasuries. If the 10-year yield rebounds to 4.5%, long bonds will suffer price declines.
Target the "Belly": The 5-year tenor is the sweet spot, benefiting from near-term cuts while carrying less inflation risk than long bonds.
Bond Ladder: Build a ladder (1y, 2y, 3y, 5y) to secure current high yields while maintaining flexibility for reinvestment if rates fluctuate.

Equities: Quality Over Speculation

Logic: "Higher for Longer" in 2026 implies sustained financing pressure. Unprofitable growth stocks dependent on cheap money face valuation compression.

Quality Factor: Focus on companies with healthy balance sheets, strong cash flow, and low leverage. These firms can thrive and buy back stock even with rates at 4%.
Sector Rotation:
- Utilities: AI data center power demand adds a growth layer to this defensive, dividend-paying sector.
- Financials: A steeper yield curve (long rates > short rates) improves net interest margins. Deregulation under Trump is also a tailwind.
- Industrials: Beneficiaries of fiscal spending and manufacturing reshoring.

Cash Management: Lock in the Window

Logic: The December cut is the starting gun for falling deposit rates.

CD Locking: Before the Dec 10 meeting, lock in CD rates of 4.0%-4.5%. Target 12-18 month maturities to bridge the potential 2026 cutting/pause cycle.
High Yield Savings (HYSA): Monitor bank rate adjustments closely and be ready to move funds to competitive institutions.

Real Estate & Mortgages

Logic: Mortgage rates are unlikely to return to 3%. Expect them to oscillate near 6% in 2026.

Buy vs. Wait: Do not defer essential purchases solely in hopes of a rate crash. Prices remain firm due to supply constraints. Affordability calculations should assume ~6% rates.

Sources

ADP Research Institute - ADP National Employment Report: Private Sector Employment November 2025 Data
Federal Reserve Board - Governor Christopher J. Waller: The Case for Continuing Rate Cuts November 17, 2025
CME Group - CME FedWatch Tool December 2025 Rate Probabilities
Federal Reserve Bank of Atlanta - Sticky-Price CPI October 2025 Data
Goldman Sachs - The Outlook for Fed Rate Cuts in 2026 Global Views Report
Morgan Stanley - 2026 Investment Outlook: The BEAT December 2025
J.P. Morgan Asset Management - 2026 Year-Ahead Investment Outlook - December 2025
PIMCO - Charting the Year Ahead: Investment Ideas for 2026 December 3, 2025
BlackRock - Fed rate cuts and potential portfolio implications September 2025
The Conference Board - Fed Meeting Preview: December 2025 December 2025
Bank of America Institute - Consumer Checkpoint: Holiday Prep or Schlep? November 12, 2025
Indeed Hiring Lab - US Labor Market Trends Chartbook: November 2025 November 2025
Mastercard - SpendingPulse: U.S. Black Friday Retail Sales November 29, 2025
Visa - Spending Momentum Index November 2025
International Monetary Fund - Alternative Data and Monetary Policy by Claudia Sahm December 2025

TOC

Deep Dive Preview of December 2025 FOMC Meeting & 2026 Macroeconomic Strategy Report

December FOMC Preview: Critical Decisions in the Fog

Context: An Unprecedented Data Vacuum

Core Prediction: The Inevitability of a 25 bps Cut

Rationale: Labor Market "Red Light"

Rationale: Restrictive Real Rates

Why Not 50 Basis Points?

The 2026 Policy Path: Why the Fed May "Cut then Pause"

The "Last Mile" Problem of Structural Inflation

Trumponomics and Reflation

The Systematic Rise of R-star

Historical Precedents: 1995 & 1998 "Insurance Cuts"

Internal Divisions: Hawks vs. Doves

The Core Disagreement

Faction Analysis

Significance of Dissent

Macro Theory: The Triangle of Rates, Jobs, and Inflation

The Flattening and Steepening Phillips Curve

Lagged and "K-Shaped" Transmission

Investment Strategy for Individual Investors

Fixed Income: Duration & Laddering

Equities: Quality Over Speculation

Cash Management: Lock in the Window

Real Estate & Mortgages

Sources

TOC

Deep Dive Preview of December 2025 FOMC Meeting & 2026 Macroeconomic Strategy Report

December FOMC Preview: Critical Decisions in the Fog

Context: An Unprecedented Data Vacuum

Core Prediction: The Inevitability of a 25 bps Cut

Rationale: Labor Market "Red Light"

Rationale: Restrictive Real Rates

Why Not 50 Basis Points?

The 2026 Policy Path: Why the Fed May "Cut then Pause"

The "Last Mile" Problem of Structural Inflation

Trumponomics and Reflation

The Systematic Rise of R-star

Historical Precedents: 1995 & 1998 "Insurance Cuts"

Internal Divisions: Hawks vs. Doves

The Core Disagreement

Faction Analysis

Significance of Dissent

Macro Theory: The Triangle of Rates, Jobs, and Inflation

The Flattening and Steepening Phillips Curve

Lagged and "K-Shaped" Transmission

Investment Strategy for Individual Investors

Fixed Income: Duration & Laddering

Equities: Quality Over Speculation

Cash Management: Lock in the Window

Real Estate & Mortgages

Sources