Longer-term inflation will likely be higher than what prevailed before the pandemic but close to the FRB’s 2% target. The Federal Reserve Bureau (FRB) will cut the (Federal Funds Rate) FFR by 0.25% at every other meeting until it achieves neutrality (3.75%).
Security National Bank’s investment services team expects the 10-year Treasury to end 2025 at 4.75%. Fiscal pressures will eventually lead to higher long-term rates. We expect earnings for the S&P 500 to post modest growth for the rest of this economic cycle. We see de minimis recession risk before 2027 as growth will likely be around its non-inflationary potential of 1.8% to 2.0%. We are penciling in an inflation wave in 2027.