Overview
- Futures put roughly 85%–90% odds on a 25 basis-point cut on Dec. 9–10, with analysts expecting a hawkish tone and a high risk of dissent.
- Since the easing cycle began in 2024, 10- and 30-year Treasury yields have climbed and the term premium has risen by nearly one percentage point, reflecting inflation and fiscal concerns.
- Bond managers are reducing long-duration exposure and rotating into intermediate maturities such as five-year Treasuries, positioning for a shallow path of cuts in 2026.
- A 43-day government shutdown delayed key inflation and employment reports until after the meeting, leaving policymakers to decide with incomplete official data.
- Political risk looms as President Trump prepares to replace Chair Jerome Powell, yet rates futures imply only modest additional easing under a potential new chair next year.