Trump May Get the Rate Cuts He Wants — But Not Cheaper Mortgages
Just because the Federal Reserve lowers its target rate doesn’t mean long-term yields will follow. The level of economic optimism is more important.
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Black Friday showed the US consumer remains strong, just as we discussed in this newsletter last week. While this is good news for stocks, much of what we consume, save and invest revolves around interest rates. And I have some bad news for you: higher borrowing costs are here to stay.
Think of this as a bull case for the US economy. Artificial intelligence investment and government deficits have overcome all negative shocks including tariffs. If the US Supreme Court deems tariffs illegal, the deficits can keep that bull case intact, provided the strength of AI spending doesn’t begin to falter.