Sometimes the market feels like that one friend who insists “I’m fine” even though their house is literally on fire behind them.
The US dollar is calm. Volatility is down. Stocks are wobbling but not collapsing.
On the surface, everything looks… oddly peaceful.
But underneath that calm is a cocktail of political trade reversals, tariff U-turns, Fed infighting, and money-market weirdness that feels like watching a Korean drama plot twist every 10 minutes.
And all of it matters for how you invest – especially if you’re holding US stocks, global equities, or planning where to park your money for 2026.
The big story right now is that Wall Street has suddenly pulled back from expecting another interest rate cut in December.
Just a week ago, traders were almost sure a third cut was coming.
Now?
Only about a 40% probability.
What changed? Inflation isn’t falling as quickly as the Fed hoped.
Food prices in the US are still elevated – partly because of tariffs introduced by Trump earlier this year. Services inflation remains sticky.
And because the US government is in its longest-ever shutdown, the Fed doesn’t even have full visibility on the labour market or consumer spending data.
Imagine driving down the CTE at night and your headlights suddenly die.
You probably don’t speed up, right? That’s exactly the Fed’s mindset.
Without clear data, they’d rather keep rates steady than cut too soon.
On top of that, the central bank is split. Some Trump-aligned members want deeper cuts, arguing that the economy needs more support.
Others warn that inflation isn’t fully under control, so cutting now would be reckless. Powell is stuck in the middle, trying to herd both sides without causing a market panic.
Meanwhile, the White House is making tactical moves of its own.
After months of tariffs pushing grocery prices higher, officials are signalling targeted tariff reductions on coffee, bananas and selected food imports. They’ve also just struck framework trade deals with Argentina, Ecuador, Guatemala and El Salvador – all aimed at easing pressure on household budgets and keeping voters happy.
So on one side you have the Fed trying to manage inflation. On the other, the administration is scrambling to undo part of the damage caused by its own tariffs.
And investors are caught between both forces.
Here’s where it gets interesting.
Tariffs pushed up import prices. That fed into inflation.
That inflation is now the reason the Fed can’t cut rates. Without cuts, economic growth risks slowing.
So the White House is now trying to reverse some tariffs to bring inflation down enough for the Fed to eventually have room to cut.
It’s basically a policy loop chasing its own tail.
And even though markets look calm, the machinery underneath is not. Money-market rates – like SOFR – have been creeping up and occasionally defying the Fed’s control.
That’s the kind of thing that can trigger stress in leveraged hedge-fund trades or even shake Treasury markets if left unchecked. The Fed may have to expand its balance sheet again to stabilise things.
Put it all together and you get a strange situation: a calm surface masking real pressure points beneath.
If you’ve been reading me for a while, you’ll know I’ve been saying this since last year – the “fast and aggressive rate cuts” era is dead. What we’re seeing now in the US just confirms that view.
For investors, the real impact isn’t the December meeting.
It’s the broader trend: rates have likely peaked, but they’re not coming down meaningfully any time soon.
Not until inflation truly cools.
Not until tariff-driven price pressures ease.
Not until the Fed stops arguing with itself.
And not until the data blackout from the government shutdown ends, giving policymakers proper visibility again.
So what does this mean for you?
Your cash isn’t dead weight. In a higher-for-longer world, holding cash is not a sin – it’s optionality.
Cash earns reasonable returns now (for USD at least, SGD rates are sad 🙁) , which gives you breathing room and the ability to strike when the right opportunities appear.
Bonds aren’t out of the woods.
Long-duration bonds will stay sensitive to every wiggle in inflation data and Fed commentary. This isn’t the environment to bet the farm on falling yields just yet.
Quality equities still lead. Not speculative names. Not theme-chasing. But companies with real earnings power, strong balance sheets, pricing flexibility and global demand.
These are the ones that can handle a world where policy is messy, data is noisy and politicians change their minds every few months.
This is why – for many of my clients – I shifted more exposure into broad global equities last year and maintained a higher cash buffer.
It helped us capture growth while still keeping dry powder for when valuations become compelling again.
And it’s a stance that continues to make sense.
If you’ve been feeling uncertain about how to position yourself for 2026, this is exactly the kind of environment where clear guidance helps.
I help investors build portfolios that don’t panic every time the Fed throws another plot twist – and I can help you navigate this too.
When markets look calm but policy looks chaotic, most people freeze.
But this is the time to get clear, not cautious.
Here’s the reality: The Fed is confused.
The White House is reversing some of its own tariffs to cool inflation.
Inflation is improving, but slowly. Money markets are showing signs of stress beneath the surface. And global capital is shifting in search of clarity and growth.
All this points to a year where discipline beats prediction.
Rates likely stay range-bound. Inflation grinds lower. Policy stays reactive.
And global investors who stay diversified, patient, and opportunistic will come out ahead.
Stay informed. Stay global. And stay invested – even when the surface looks calm and the currents underneath are shifting.