Marketplace All-in-One The great decoupling
Dec 9, 2025
Justin Ho, a Marketplace reporter focused on financial markets, delves into how medium-term Treasuries hint at Fed rate cuts. Matt Levin shares insights on AI bubble jargon and its financial risks, drawing parallels to vulnerabilities seen in 2008. Kristen Schwab discusses intriguing retail dynamics, reporting a sharp rise in job cuts despite strong revenue, largely due to increased automation. The conversation rounds out with exploration of small business optimism amidst challenges, painting a vivid picture of current economic trends.
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Belly Of The Yield Curve Signals Fed Expectations
- The belly of the Treasury yield curve (2–5 year maturities) signals market expectations for Fed action beyond the next meeting.
- Recent easing in demand there suggests investors think rate cuts may be limited and a neutral rate could persist.
Midterm Yields Hint Fewer Rate Cuts
- If growth and inflation pick up, the Fed will likely cut rates less and stay nearer a neutral level.
- The belly of the curve implies investors expect only a couple of cuts next year and a sustained neutral rate thereafter.
AI Financing Creates Complex, Concentrated Risks
- AI financing has spawned complex structures like SPVs, private credit and neoclouds that concentrate risk off bank balance sheets.
- Those structures could transmit stress widely if an AI funding downturn occurs.