Fed Signals Rate Cut, Credit Concerns Rattle Wall Street | Real Yield 10/17/2025

Yields sharp down , short term, interviewee explicit

explicit

NDX cautious down , medium term, interviewee implicit

implicit

RUT

Oil

Metals

USD

JPMorgan 9.2
Investment Bank $3170.00B
Steve Brown 9.0

Fed Signals Rate Cut, Credit Concerns Rattle Wall Street | Real Yield 10/17/2025

yields

The two year yield is the best crystal ball on Fed policy. They just told you the Fed will have to act more aggressively. Market is pricing in rate cuts to around 3% neutral. The 10 year yield broke 4% which was a signal to reduce duration. Demand remains strong but yields have moved lower recently indicating expectation of Fed cuts. The interviewee explicitly states market pricing in rate cuts, Fed focused on labor market weakness and cutting rates, yields recently moved lower reflecting expected Fed easing in the short term.

59 calls

-2

no reliable edge (random outcomes)

10/17/2025 9:07:08 PM	short term cautious down	5 days later	-0.25%	+0.12%
10/16/2025 5:42:00 PM	medium term cautious up	20 days later	+2.15%	+1.07%
10/1/2025 3:11:20 PM	medium term cautious down	20 days later	-3.30%	+1.65%
9/30/2025 10:13:15 PM	medium term cautious down	20 days later	-3.48%	+1.74%
9/22/2025 5:25:48 PM	medium term up	20 days later	-1.67%	-1.67%
9/17/2025 6:49:25 PM	medium term cautious down	20 days later	+0.61%	-0.30%
9/11/2025 11:57:02 PM	medium term cautious up	20 days later	+0.66%	+0.33%
9/11/2025 4:51:16 PM	short term down	5 days later	+0.37%	-0.37%
9/10/2025 9:53:06 PM	short term cautious down	5 days later	+0.37%	-0.19%
9/10/2025 6:33:02 PM	short term cautious down	5 days later	+0.37%	-0.19%
8/28/2025 1:07:30 PM	short term cautious down	5 days later	-0.38%	+0.19%
8/15/2025 9:10:00 PM	short term cautious down	7 days later	-1.52%	+0.76%
8/12/2025 4:29:28 PM	medium term cautious up	20 days later	+0.92%	+0.46%
8/8/2025 2:04:22 AM	short term cautious down	7 days later	+1.59%	-0.80%
8/4/2025 11:59:32 PM	short term down	6 days later	+1.84%	-1.84%

Show all 15 yields results

Let's dig into all of this with Steve Brown, CIO of Fixed Income at Guggenheim Investments and portfolio manager at JPMorgan Asset Management Core Plus Bond ETF. Let me start with you because you observed that there appears to be a disconnect between the labor market and GDP. Walk us through what you mean.

Scarlett Foo
Steve Brown

If you look at the GDP numbers or consumer spending, you'll say that's fine. So why is the labor market weak and what should the Fed focus on? The Fed has its dual mandate with the labor market. Really it's an AI trade. If you take out AI-related investments GDP is running about zero. Economy is slowing, might be slowing into a soft landing with 1 to 2% GDP growth, but the labor market is slowing. Could be structural because of AI or tariffs reducing hiring. No pickup in layoffs yet. Disconnect less if you take out AI effect. Things are slowing allowing the Fed to respond to weaker labor market to cut rates at least to neutral. Market is pricing in cuts to around 3% which aligns with neutral. Market is priced for a soft landing, slowing growth, and Fed allowing cuts but not aggressive cuts below neutral.
Steve Brown

You want to be a bit more mixed now in bond maturities. We expect the curve to steepen longer term. Demand across the curve is balanced. New issue supply is being digested. Strong demand and technicals especially in high-grade credit. Range bound levels for interest rates expected. The 10-year broke 4% which was a signal to reduce some duration and flatten exposure. Bonds provide upside participation if risk-off elsewhere. Yields are a big predictor of future returns.
Priya Misra

We like duration because we've been adding to risk. Owning some duration especially in the five to ten year part of the curve makes sense. Wobbles in the front end make us nervous as rates start to pick up. Bank reserves have come down. Owning duration if you have credit risk in the portfolio is sensible.
Steve Brown

The market is being driven by the labor market imbalance, not so much inflation. Fed seems determined to get back to neutral. Market does not expect big market-moving CPI events.

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