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CLA OUTLOOK

Key Insights for Sound Financial Strategies

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DECEMBER 8 WEEKLY INSIGHTS
The Federal Reserve appears prepared to cut interest rates again
  • There is growing divide at the Fed between “hawks” prioritizing inflation control and “doves” focused on labor market weakness.
  • Futures pricing have swung wildly, with the odds of an interest rate cut this week moving from 22% up to 87% over the past month, highlighting the mixed signals from Fed presidents.
  • While inflation — currently at 3% — remains above the Fed’s target of 2%, softening labor conditions have analysts’ consensus predicting further easing. (Source: CME FedWatch)
Higher real yields are benefiting bond investors
  • Investors are seeing positive real (inflation-adjusted) yields for the first time in more than 15 years.
  • Higher starting yields can provide steadier income, enhance reinvestment opportunities, and help reduce overall portfolio risk.
  • Core fixed income — treasuries, corporate bonds, and mortgage-backed securities—remains foundational in portfolios.
  • Preferred securities and high yield bonds can complement core bonds, giving investors an opportunity for additional yield. (Source: CLA Outlook)
Volatility is the price investors pay for long-term appreciation
  • The S&P 500 is up nearly 18% year-to-date, which would surprise investors in April, when there was a 17% drawdown.
  • Accepting volatility in markets — particularly in equities — has historically been the path to long-term investment success. 
  • Financial planning can help weather volatility by aligning your goals and increasing your chances of meeting those goals. (Source: Morningstar)
Develop strong financial strategies
Tune in to the CLA Outlook for 2026 as we discuss timely topics around policy, the economy, and market performance.
Strategic Opportunities
The Big Picture for 2026
The CLA Outlook signals a turning point: stabilized inflation, growth above trend, and easing interest rates. Explore the key forces influencing portfolios in the year ahead.
  • Economic outlook
    Growth is back on the horizon after three years of higher interest rates and restrictive Federal Reserve policies, with AI helping to transform industries.
  • Fiscal policy
    The rising U.S. deficit remains a key concern as government spending continues to outpace revenues — watch for this to be a focal point heading into midterm elections.
  • Fixed income outlook
    Lower interest rates should be a tailwind to bonds in 2026, though consider credit quality and duration when building high-quality income portfolios.
  • Equity outlook
    Despite elevated stock valuations, led by tech-dominant Magnificent-7 stocks, equities remain compelling because of strong earnings growth and a robust economic backdrop.
  • Alternatives outlook
    Lower interest rates favor private equity and private real estate, while private credit can warrant caution. Manager selection and due diligence remain critical.
  • We can help
    No matter your financial position, incorporating sound tax and wealth advisory could help you achieve more.
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