In the Money with Amber Kanwar

The Fed is on a Collision Course: Big 2026 Call from a +$245B Macro Chief

Dec 4, 2025
Guest
Dustin Reid
Dustin Reid, Chief Strategist for Fixed Income at Mackenzie Investments, shares his insights on the impending challenges facing the Fed and the economy. He argues that chaotic Fed communications are complicating markets and predicts significant impacts from the December rate decision. Reid discusses the diverging signals in the U.S. labor market, the cooling Canadian housing sector, and why AI investment is now a key growth driver. With potential political influences on Fed policy, he emphasizes risk management strategies for fixed income investors.
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INSIGHT

Chaotic Fed Messaging Changed Market Odds

  • Chaotic Fed messaging created market confusion and materially shifted expectations for a December cut.
  • Dustin Reid argues the December cut will likely be the last one for a while given the underlying data and inflation dynamics.
INSIGHT

U.S. Growth Strong But Inflation Sticky

  • The U.S. economy is K-shaped with strong overall GDP and persistent ~3% inflation.
  • Reid expects inflation to stick near 3% and not fall quickly even if the labor market cools.
ADVICE

Avoid Long U.S. Duration If Policy Turns Loose

  • Position away from the long end of the curve if you fear a policy error; long 30-year exposure is vulnerable to inflation.
  • Prefer being short long-duration U.S. debt if you expect Fed-induced inflationary repricing.
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