Guggenheim expects Fed to cut rates about every quarter in 2025

By Divya Choudhury and Bansari Mayur Kamdar

DAVOS, Switzerland (Reuters).

The Fed will continue tapering, albeit at a slower pace than expected, Guggenheim chief executive Anne Walsh told Reuters at the Global Markets Forum at the start of the World Economic Forum’s annual meeting in Davos.

Traders’ bets have shifted over the past few days to just one Fed rate cut this year, with the possibility of a second rate cut depending on the balance sheet, up from at least three a month ago.

Tariffs expected from incoming President Donald Trump likely won’t be as punitive as many expect, Walls said, as long as the dollar remains strong as a reserve currency and the U.S. continues to attract capital.

Walls expects tariffs to rise by less than 10% on average and be more country-specific.

After a sharp rise through 2022, the bond market is now in its third year of trading in a range, Walsh said, whose volatility makes it interesting.

“If we get to 5% over 10 years, that’s extreme and it’s such an oversold position, it’s a total buying opportunity,” Walsh said, adding that bond yield spreads could continue to be tight, which would also be good. . US stocks.

He expected stocks to benefit more from positive global themes such as artificial intelligence (AI), energy and the re-establishment of manufacturing in the US, with the S&P 500 expected to return 8% to 10% through the end of 2025.

Walsh said there is some uncertainty about Trump’s policies and how his incoming administration will actually be implemented, as well as a risk that the U.S. economy will slow more than currently projected.

“It’s like a ping-pong game … between policy and politics, and that’s going to create a lot of volatility around our (investment) themes this year,” Waltz said.

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(Reporting by Divya Choudhury in Davos and Bansari Mayur Kamdar; Editing by Alexander Smith)