Fed Ends QT as Global Central Banks Strike Cautious Tone
The Federal Reserve formally ended quantitative tightening this week, injecting $13.5 billion into U.S. banks as markets priced in an 87% probability of a December rate cut. The shift came as major central banks adopted a more cautious stance.
President Trump announced he will name a new Federal Reserve Chair in early 2026, while again calling for immediate rate cuts citing support from JPMorgan CEO Jamie Dimon. The political pressure lands as JPMorgan analysts warn that markets have overpriced the scale and speed of expected Fed cuts, projecting Treasury yields will rise in 2026 and that U.S. bonds are unlikely to repeat their strong 2025 performance.
JPMorgan’s macro outlook frames the U.S. economy as transitioning from expansion to slowdown, rather than moving toward recession. Analysts attribute recent weakness to GDP distortions from the government shutdown and expect partial offsets in early 2026. The bank anticipates broader earnings growth across sectors next year as rates eventually decline, though it cautions that risks of weaker-than-expected economic performance remain elevated.
On artificial intelligence, JPMorgan pushed back on bubble fears, contrasting today’s environment with the late-1990s tech boom. The current investment cycle is being funded by profitable, cash-rich firms, with free cash flow margins near 20% more than double dot-com–era levels.
Posted Dec 3, 2025, 1:56 AM UTC