Why the Fed’s Stubbornness Is Making Markets Go Wild 🤑

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Out in the golden fields of Wall Street, where numbers dance and fortunes rise and fall like tides, there sits a peculiar paradox. The markets are rallying—not because the Federal Reserve is cutting rates, but because it isn’t. Yes, you heard that right. It’s as if everyone decided to throw a party while the bouncer stood firm at the door, arms crossed, refusing to let anyone sneak in underage.

Liz Ann Sonders, chief investment strategist at Charles Schwab and someone who probably knows more about money than most of us will ever see, dropped some wisdom on the Excess Returns YouTube channel. She says investors are oddly comforted by a Fed that acts like your stubborn uncle at Thanksgiving dinner: unmoved by political pressure (even from President Trump) and laser-focused on its mandate of low inflation and maximum employment. Who knew stubbornness could be so endearing? 🦺

“I think part of the reason why the market is doing well,” she muses with the calm authority of someone explaining gravity to a toddler, “is because the Fed is not cutting. A combination of because they’re not bowing to political pressure, and oh, by the way, neither side of their dual mandate suggests that they should be cutting.” Translation: They’re doing their job, folks. Deal with it.

Financial conditions? Easy-peasy. Unemployment? Dropping like a rock. Inflation? Still too high for comfort. So no, dear reader, the Fed isn’t about to play Santa Claus and hand out rate cuts just yet. And thank goodness for that, really—because according to Sonders, a premature cut could send borrowing costs skyrocketing faster than a cat spotting a cucumber. 🐱🥒

Here’s the kicker: Borrowing costs aren’t tied to whatever magical number you’re thinking of; they’re hitched to the 10-year Treasury yield—a creature of the market, not the Fed. Cut rates now, and the market might freak out, pushing yields higher and making life harder for businesses and consumers alike. Remember last fall? When the Fed slashed rates, only for the 10-year yield to spike anyway? Yeah, nobody wants a repeat performance of *that* financial slapstick comedy. 🎭💸

Sometimes doing nothing is the best thing you can do. Take that, productivity gurus! 😎

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2025-08-03 12:22