Rising unemployment rate suggests the Fed will cut rates in December, says iCapital's Sonali Basak

Federal Reserve (The Fed) & Interest Rates - A potential hawkish rate cut in December is considered, driven by core PCE expectations around 310% and unemployment nearing 450% [2][3] - The impact of a 25 basis points rate cut is questioned regarding its effectiveness on the S&P 500 and overall market stimulus [4] - The market is less convinced about further rate cuts into next year until a more dovish Fed stance is observed [3][4] Private Credit Market - Vintage risk in private credit deals from 2021-2022, impacted by poor valuations and changing rate environments, is a key concern for the coming year [6] - The conversation around private credit involves both potential losses/defaults and liquidity issues, with some investors misunderstanding the liquidity of these structures [7] - Default rates in private credit have remained relatively low, averaging between 200% and 350%, depending on the source [11] - More frequent marks, specifically monthly marks, are becoming more common in the private credit market, revealing divergence among different managers [11] - Aggregate credit quality has held up, but concerns around marks and liquidity are more significant questions [12] Economic Indicators & Consumer Credit - Insurance costs and auto/home-related expenses remain high, warranting attention for potential credit quality deterioration [9] - Defaults are expected at the margins, particularly in sectors tied to the lower-income consumer and certain forms of consumer credit [8]