Zacks Investment Management

Recent Fed rate cuts and rising yields on longer bonds (10-year and 30-year Treasurys) create a steeper yield curve. This is good news, but it may not fundamentally alter the economic outlook.

Although many investors are more bullish as 2025 closes, a number of worries remain—including inflation, Fed independence, dollar stability, crowded trades, and rising yields.

The 25-point rate cut was not a surprise, but is welcome relief. However, policy uncertainty and weak job growth mean continued volatility, even as Q3 earnings offer encouragement.

Bonds tend to be stable and not surprising. But the recent rise in long-term government bond yields has attracted attention and concern.

Strong earnings, cautious investment trends, and concentrated leadership shape the outlook.