Fixed Income & Equities Markets Week in Review

Most benchmark Treasury yields moved higher this week, with the bond market under pressure even after the Fed delivered its third rate cut of the year. The 30-year Treasury yield climbed to 4.86%, its highest level since early September. At the front end of the curve, the 2-year yield ended the week slightly lower, slipping about 8 basis points on Wednesday following the widely expected rate cut.

Heading into the meeting, the market had braced for a somewhat hawkish cut amid speculation that as many as five FOMC members might dissent. The final vote came in at 9–3 - the most dissents since 2019. Governor Stephen Miran again dissented in favor of a larger 50 bp cut, while Presidents Jeff Schmid and Austan Goolsbee dissented in favor of holding rates steady. Chair Jerome Powell also kept the door open to additional easing before his term ends in May 2026. Many investors still expect that whoever succeeds Powell will pursue more aggressive cuts at President Trump’s urging. This combination of factors helped support the short end, pulling yields modestly lower.

In contrast, longer-term yields rose, driven in part by commentary from Fed officials - including Goolsbee - expressing ongoing concerns about inflation. Expectations for a hawkish cut were based on the assumption that Powell would push back against a potential January cut to unify the Committee. Instead, he tolerated two formal dissents and four “soft” dissents from participants who preferred to keep rates unchanged, emphasizing flexibility over consensus. The most recent CPI report (October) showed headline inflation running at 3.0% year-over-year in September, while the Atlanta Fed’s GDPNow estimate for Q3 growth ticked up from 3.5% to 3.6%. Strong growth paired with still-sticky inflation has kept a floor under intermediate and long-term yields for much of the year. Investors will finally get fresh inflation and labor-market data next week, with nonfarm payrolls on Tuesday and CPI on Thursday.

With ideological divisions on the Committee as wide as they've been in years, it’s worth noting that the calendar flip will also bring a rotation of voting members. Policy hawks Musalem (St. Louis) and Schmid (Kansas City), along with generally neutral members Collins (Boston) and Goolsbee (Chicago), will rotate off. They will be replaced by hawks Hammack (Cleveland) and Logan (Dallas), neutral member Kashkari (Minneapolis), and dove Paulson (Philadelphia). Given the rising number of dissents and the Committee’s apparent fracture, the policy leanings of each voting member could become especially important in 2026, as markets increasingly count potential votes heading into each meeting. A new Fed Chair is also expected to be announced early in the new year.

As of December 12, 2025