A conversation this week between business TV anchors included the following half-joking observation: “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. What many expected to 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).