A conversation between business TV anchors this week included the half-joking observation that credit managers are saying “Our 2026 outlook is baked. We’re now focusing on 2027.”

While we admire the brio behind this assertion, our confidence with market predictions – including our own – is not great. Thinking about what many thought would happen this year, even as late as April’s Liberation Day, is a good example. Instead of a recession, crashing rates and wild inflation, the exact opposite occurred. Hence the bullishness for next year. 

Even forecasting how much the Fed will cut rates, and by when, is no slam dunk. As recently as November 18 barely 30% of market participants believed the December meeting would deliver a 25 bps cut. Today that stands at over 80% (see our Chart of the Week).