Fed will lean dovish in 2026, says PNC's Yung-Yu Ma

Fed Policy & Market Outlook - The market sentiment suggests a high likelihood of the Federal Reserve cutting rates in December [5][6] - The key risk lies in the messaging accompanying the Fed's rate cuts, specifically whether it will be a hawkish cut, data-dependent, or signaling a pause [7] - The market anticipates the Fed to lean dovish in 2026 due to incoming soft data [8] - Rate cuts and stable long-term rates are expected to benefit housing and hard assets like real estate, potentially boosting GDP and the economy [9] - The second year of a presidential cycle is typically the best, and midterms are expected to be incredibly important, potentially injecting fiscal stimulus into the economy [9] Economic Indicators & Potential Growth - Earnings are supporting the economy, indicating potential for continued market growth [10] - Maintaining anchored inflation signals is crucial for sustained economic growth [10] Market Technicals & Sentiment - The selloff last week was not primarily driven by hawkish Fed signals, as the bond market remained stable [2] - Concerns about AI's impact on the market may have been overdone, with technical factors like hedge fund selling, deleveraging, ETF selling, and short gamma positions contributing to the volatility [3][4]