Russell Investments: The Fed is expected to implement a hawkish rate cut, with next year's terminal rate projected to be between 3.25% and 3.5%.

According to TechFlow, on December 9, as reported by Jintou Data, Paul Eitelman, Senior Director and Chief Investment Strategist of Russell Investments North America, stated in a report that the Federal Reserve’s interest rate decision on Wednesday appears to be a difficult choice. There is disagreement within the FOMC on how much “insurance” to provide the economy—a rare combination of robust economic growth but weak job growth. Russell Investments expects the Fed to make a “hawkish” 25 basis point rate cut, meaning the Fed’s forward guidance on the future direction of rates may remain cautious. Eitelman said, “We expect the Fed to slow or stop the easing cycle in early 2026, with a terminal rate between 3.25% and 3.5%.” He also pointed out that the current 10-year U.S. Treasury yield is at 4.1%, above Russell Investments’ fair value estimate, supporting a strategic allocation of duration risk in portfolios.