Bond Bulletin: The Fed’s glidepath into 2026

November’s delayed US labour market report and the December Federal Reserve (Fed) meeting reinforced a consistent message: policy is converging toward neutral, but the committee perceives rising downside risks to employment. With inflation still above target yet not re-accelerating, this Bond Bulletin examines the Fed’s potential paths heading into 2026.

Implications for Fixed Income Investors

Our base case is a drift toward neutral policy. With weakness in the labour market and moderating wage growth, the Fed maintains an easing bias, with risks tilted toward more cuts than is currently priced. Against this backdrop, we have increased our overweight to US duration. We are closely monitoring 2026 leadership risk as a potential volatility catalyst, which will likely create tactical opportunities for active managers.

About the Bond Bulletin

Each week J.P. Morgan Asset Management's Global Fixed Income, Currency and Commodities group reviews key issues for bond investors through the lens of its common Fundamental, Quantitative Valuation and Technical (FQT) research framework.

Our common research language based on Fundamental, Quantitative Valuation and Technical analysis provides a framework for comparing research across fixed income sectors and allows for the global integration of investment ideas.

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