Global Outlook and Fed Uncertainty (with Romaine Bostick, Katie Greifeld)

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Harvard 1.8
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Gita Gopinath 8.5

Global Outlook and Fed Uncertainty (with Romaine Bostick, Katie Greifeld)

yields

It is actually highly unusual for the Fed to be cutting interest rates and the 10-year yield to be higher than when they first started cutting interest rates. Her analysis points to persistent inflation pressures from tariffs and fiscal stimulus, coupled with uncertainty about Fed policy and leadership, suggesting upward pressure on yields despite Fed cuts.

11/1/2025 2:00:00 PM	medium term cautious down	21 days later	-1.66%	+0.83%
9/17/2025 1:00:49 PM	long term up	60 days later	+0.71%	+0.71%
9/5/2025 11:17:40 PM	short term cautious down	7 days later	-0.30%	+0.15%
9/4/2025 12:03:38 AM	short term cautious up	5 days later	-1.32%	-0.66%
8/16/2025 2:06:17 AM	short term cautious down	7 days later	-1.52%	+0.76%
8/8/2025 8:34:45 PM	short term cautious up	7 days later	+1.59%	+0.80%
8/4/2025 4:53:03 PM	medium term cautious down	20 days later	+1.88%	-0.94%

Show all 7 yields results

Introduces Gita Gopinath to discuss the global outlook and whether it holds up into 2026.

Katie Greifeld
Gita Gopinath

Believes 2026 will be another year of both strength and risks. Strength from AI capex and global fiscal spending (e.g., One Big Beautiful Bill). Risks come from uncertainty about Fed policy and monetary policy.
Gita Gopinath

Notes it is highly unusual for the Fed to be cutting interest rates and the 10-year yield to be higher than when they first started cutting.
Asks what the rising yield tells about the market's view of economic conditions relative to rate cut expectations.

Romaine Bostick
Gita Gopinath

Says it tells you it's quite uncertain what will happen next year in terms of inflation and Fed interest rates. Markets aren't pricing in the likelihood of a rate increase, which is surprising given the economy.

Adds that 2026 is a critical year for the Fed due to decisions on the next Fed chair and how monetary policy gets set. This uncertainty is not priced in the market so far.
Asks if she shares concerns about Fed independence given the divergence between bond yields and the Fed's expected path.

Katie Greifeld
Gita Gopinath

Shares some of those concerns. The chair communicates the path and reaction function; an environment with a lot of disagreement and dissent makes that harder.
Asks what she would be on the lookout for since these concerns aren't priced in.

Katie Greifeld
Gita Gopinath

Would look at volatility indices like the VIX. Notes inflation is at 2.8%, but tariffs are adding about 0.7%. Expects another half a percentage point of that impulse next year.

Adds that on top of tariff effects, stimulative effects from the One Big Beautiful Bill and AI capex will happen. Many forces are moving in the direction of keeping inflation high, maybe going higher.
Asks about the pushback against inflation, given the lack of coordination among governments and central banks, and if going it alone is a mistake.

Romaine Bostick
Gita Gopinath

Governments are in a fiscal expansionary mode globally (Japan spending more, U.S. deficits high). We are in an environment of high debt and central banks under pressure to lower rates to support government borrowing.

States 2026 is a very important year to see if the world finds a way to work better together. If not, we are moving toward a slow and silent decoupling everywhere.

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