Greg Daco argues the Fed will hold rates because current inflation is supply-driven (energy, AI) and not responsive to rate hikes. Real incomes are contracting, capping consumer spending. The economy moves forward but with fragilities, so the Fed will stay on hold to avoid hurting growth.
implicit
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Metals
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EY-Parthenon
6.0
Management Consulting
Greg Daco 7.0
Management Consulting
Greg Daco 7.0
US rates; US 10y
6/26/2026 9:31:37 PM
dxy
With the Fed on hold and no rate cuts or hikes expected, the dollar (DXY) is likely to trade rangebound against major currencies.
ndx
Daco mentions AI is straining limited resources and putting upward pressure on electronics/computers. This suggests tech (NDX) may have some upward bias from AI demand, but overall growth is capped.
rut
Daco says the economy is 'still moving forward' but with fragilities and capped consumer spending. Small caps (RUT) could see modest upside from a steady Fed but constrained by income erosion.
wti
Daco notes energy prices have come down and expects lower inflation in H2 partly due to this. Implies WTI may decline or stay subdued in the near term.
yields
Daco explicitly says the Fed will 'hold tight' and 'stay on hold' despite inflation being high, implying yields will remain rangebound as the Fed does not hike or cut.
