Global Research Unlocked Year ahead in global inflation markets
Dec 9, 2025
Meghan Swiber, a Senior US Rates Strategist, and Mark Capleton, the Global Head of Inflation-Linked Strategy, dive into the future of inflation markets. Meghan discusses potential Fed rate cuts driven by unemployment concerns, while also addressing Powell's data dependence. Mark warns about persistently low euro inflation and highlights the anomaly in the US-Euro long-term inflation spread. They analyze the impact of the UK budget on breakevens, suggesting it could make medium-dated options more attractive. Tune in for their expert insights!
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Fed Cuts Reflect Jobs Risk Over Inflation
- The Fed is likely cutting because it judges unemployment risk higher than inflation risk, not because inflation is comfortable.
- Meghan Swiber notes heavy data flow between meetings will constrain Powell from delivering a hawkish cut next week.
Hassett Nomination Raises Independence Questions
- A potential Hassett Fed links the Fed more closely to the administration and could push for deeper cuts below 3%.
- Mark Capleton warns success depends on data and FOMC composition, and independence concerns may affect credibility.
US Inflation Seen Above Target Longer Than Markets Price
- Economists expect above-target US inflation through 2027 with tariffs and fiscal stimulus keeping inflation elevated.
- Meghan Swiber explains markets still price Fed credibility and view many risks as short-term, limiting inflation risk premia.