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The Fed May Cut Again, But This Is Not An All-You-Can-Eat Easing Buffet

Author

Noah Zelvis
December 10, 2025

It’s Fed cut week and the feelings are weird: Powell looks set to push through another quarter-point cut even though a big chunk of the room would rather keep rates where they are, and the message is likely to be, “Enjoy this one, but don’t expect seconds unless the data really crack.”

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Macro Analysis

This meeting isn’t your standard everyone nods and cuts setup.

Heading into the decision, as many as half of the voting members have basically said, “I don’t see the case for another cut.”

The other half is staring at a softer labor market, patchy data after the shutdown, and leading indicators that point to a slower 2026 and saying, “If we’re going to help, it has to be now.”

Powell’s likely compromise is a classic cut-and-cap: trim rates a quarter point to acknowledge the weaker hiring backdrop and shakier confidence, then raise the bar for future cuts by stressing data dependence and no promises about January.

That way, doves get their insurance cut, hawks get tougher language on inflation, and everyone pretends to be mostly happy.

In the background, the politics are getting louder.

The president clearly wants a more aggressive cutter in the chair next year, with Kevin Hassett openly talking about plenty of room to lower rates if the data cooperate.

At the same time, leading indicators are drifting lower, signaling a cooler 2026 as businesses adjust to tariffs and consumers downshift from their mid-2025 spending burst.

For you, the takeaway is simple: enjoy lower rates at the margin, but don’t build a portfolio that assumes the Fed is about to go on a cutting spree.

This is likely a nudge toward “neutral,” not a race back to zero.

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Actionable Stuff

  • Play for one and cautious, not pivot party. Assume a cut with a higher bar for repeats, not an open bar of easy money.

  • Back balance-sheet adults. Slower growth plus noisy politics favors lenders and managers that already stress-test for rougher scenarios.

  • Tilt toward quality yield. As front-end rates drift lower, solid dividends and coupons from real businesses matter more.

  • Avoid pure rate junkies. Names that only work if we get multiple fast cuts are asking for trouble if Powell taps the brakes.

  • Borrowers: check your reset dates. If you have floating-rate debt, know when it moves and what a smaller-than-hoped set of cuts means for your payment.

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Top Picks

Ally Financial (NYSE: ALLY)

Ally lives where the Fed story and the real world collide: online banking, auto loans, and consumer credit. Higher rates have squeezed borrowers and slowed used-car demand, but they’ve also let Ally earn more on its assets.

A cut-and-cap move is actually a sweet spot, as funding costs can ease over time, consumer stress gets a bit of relief, and the Fed still sounds serious about not letting inflation run wild.

If Powell delivers one more cut and then waits for the data, Ally gets breathing room without sending the message that we’re headed into a crisis. 

You’re basically betting that consumers muddle through a softer 2026 rather than falling off a cliff, and that Ally keeps doing what it has been doing: managing credit tightly, growing deposits, and staying conservative enough to survive the next plot twist.

Zions Bancorporation (NASDAQ: ZION)

Zions is a regional bank with deep ties to small and mid-sized businesses—the same crowd that’s been hit hardest by hiring slowdowns, tariffs, and higher borrowing costs.

When the Fed trims rates, even modestly, that world feels the difference.

Interest expense comes down a bit, new projects start to pencil out again, and the odds of really ugly credit losses soften.

At the same time, a divided Fed that cuts once and then talks tough is actually good discipline for a lender like Zions. 

It encourages cautious underwriting and discourages the kind of cheap money forever behavior that leads to blow-ups later.

You’re not buying a growth rocket here; you’re leaning into a name that benefits if the Fed threads the needle and the economy just slows instead of slams.

CubeSmart (NYSE: CUBE)

Self-storage looks boring until you remember it feeds on life transitions: moves, downsizing, divorces, job changes, and small businesses needing flexible space. 

A slow-growth 2026 with choppy confidence is practically a marketing campaign for that mix.

CubeSmart collects steady rent checks while people reshuffle their lives in response to higher prices, changing jobs, and different housing choices.

Fed cuts help at the margin by easing financing costs and supporting property values, but CubeSmart doesn’t need a big policy swing to keep humming.

People still need somewhere to stash their stuff whether rates are 3.5% or 4%.

In a world where investors are hunting for yield that isn’t just another bond fund, a mid-cap storage REIT with durable demand can slot in nicely.

Invesco Ltd. (NYSE: IVZ)

Asset managers like Invesco sit at the crossroads of markets and policy.

When the Fed cuts, even cautiously, it lowers the gravity a bit on risk assets, which supports flows into ETFs, active funds, and model portfolios.

When the Fed sounds more hawkish, volatility can pick up, but as long as we’re not in a full-blown recession scare, investors usually reshuffle rather than exit entirely.

Invesco benefits either way if you think we’re headed into a lower but not low rate world: bonds look more interesting again, balanced portfolios make sense, and investors get off the sidelines. 

The political noise around the next Fed chair is a sideshow here; what really matters is that policy seems likely to drift gradually easier over the next couple of years, not snap tighter.

For a mid-cap manager with big ETF franchises, that’s a pretty workable backdrop.

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Bottom Line

This week’s cut is likely, but it’s not a green light for wild risk-taking.

Powell is trying to give the economy a bit more cushion without promising a full easing cycle, all while staring down a more political future for the Fed and softer leading indicators for 2026.

Your best move is to build around that middle path: names that benefit from slightly lower rates and slower, not catastrophic, growth.

Think solid lenders, boring real-asset plays, and asset managers that can live with a world where cash is a little less king but discipline still matters.

Let everyone else argue about who sits in the big Fed chair next, as your job is to own the businesses that can handle whoever ends up holding the gavel.

That’s it for today’s edition—thanks for reading! Reply to this email with any feedback or let me know which macro trends or markets you’d like me to cover next.

Best Regards,
—Noah Zelvis
Macro Notes