RiskReversal Pod Hawks & Doves with SoFi's Liz Thomas
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Dec 9, 2025 Liz Thomas, chief economist at SoFi, shares her insights on the bond market’s reaction to rate cuts and forecasts for 2026. She discusses the rising Treasury yields and how Japan impacts global markets. Liz highlights anticipated Fed leadership changes and liquidity risks. The conversation also dives into consumer spending shifts, the recent surge in M&A activity, and the healthcare sector's rotation. Finally, she provides an optimistic outlook for gold, anticipating new highs as demand holds strong.
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Bond Yields Rising Despite Expected Cuts
- Treasury yields rose despite expected Fed cuts due to deficits, liquidity strains, and global currency moves, especially Japan.
- The market is signaling concern about fiscal paths and central bank autonomy rather than just rate expectations.
Fed Chair Uncertainty Matters More Than Cuts
- Fed leadership and split policymaker views may be a key driver behind bond market caution.
- Even a dovish chair won't guarantee broad rate cuts because the Fed is divided among hawks, doves, and neutrals.
Monitor Fed Balance Sheet, Not Just Rates
- Watch Fed balance sheet changes as closely as rate moves because liquidity management may matter more going forward.
- Expect the Fed's balance sheet size to influence markets and central bank policy effectiveness into 2026.