US equities fell as a result, while US Treasury yields rose. Chair Jerome Powell said lowering borrowing costs again in December is far from a foregone conclusion, a more hawkish tilt than the market was pricing. Investors had also anticipated the end of quantitative tightening to start imminently.

Despite a more cautious Fed, Mark Haefele, chief investment officer at UBS Global Wealth Management maintains his view that there will be two additional interest rate cuts between now and the early part of 2026, with improving liquidity supporting risk assets.

He believes that the labor market weakness should justify further rate cuts. “We maintain our call for a rate cut in December and one more cut in 2026, motivated by the cooler job market and the so-far limited impact tariffs are having on inflation,” Haefele said. “The Fed’s policy path forward has bolstered the case for quality fixed income as a source of income and portfolio resilience.”

"We recommend investors consider medium-duration high grade government and investment grade corporate bonds. We also expect gold to stay strong, and maintain our year-end target of $4,200/oz, while an easing Fed should continue to support the backdrop for equities,” he added.

Other wealth manager reactions
Isaac Stell, investment manager at Wealth Club
“As widely expected, the Fed has opted for a brace of rate cuts, lowering rates by 0.25 per cent for the second month in a row. A significant slowing in the labor market over the summer meant today’s cut was a foregone conclusion. While the ongoing government shutdown means there’s no official data, private sources suggest that the slowdown has not abated. Stock and treasury markets have been rallying as the rate cut narrative and enthusiasm for AI tech stocks push markets to all-time highs. Today’s decision will do nothing to dampen that enthusiasm. However, stubbornly high inflation will make justifying further rate cuts harder. A hat-trick of cuts could be elusive.”

Nicolas Sopel, head of macro research and chief strategist at Quintet Private Bank
“While the end of quantitative tightening should somewhat ease concerns about rising government bond yields given a widening fiscal deficit in the US, we remain underweight in US Treasuries. Indeed, we think the Treasury market currently fully reflects expectations that the Fed will stop cutting interest rates at 3 per cent, suggesting that the downside in Treasury yields is limited.”

Max Stainton, senior global macro strategist at Fidelity International
"Looking ahead, despite Chair Powell’s insistence that a lack of data may manifest as caution around another rate cut, we expect this lack of data to manifest dovishly. The reduced data flow both masks the effects of previous DOGE layoffs and will start to produce its own negative growth effects as its length extends. As a result, we expect one additional cut by the end of the year in light of these dynamics and the revealed preference for being more dovish by halting QT earlier than most expected.”

Daniel Siluk, head of global short duration and liquidity and portfolio manager at Janus Henderson Investors
“The Federal Reserve delivered a largely uneventful October statement, lowering the federal funds rate by 25 bps to a target range of 3.75 per cent to 4.00 per cent. The decision was accompanied by a modest operational shift: quantitative tightening will conclude on December 1, with agency MBS repayments reinvested into Treasury bills going forward.

“The statement acknowledged limited data availability due to the recent government shutdown, but noted no material change in underlying trends. A new line indicating that “downside risks to employment rose in recent months” suggests that the Fed is responding to alternative labor market signals, though this does not appear to reflect a major shift in the broader policy stance. Liquidity operations were left unchanged, for now, and QT will continue through November. This may keep upward pressure on front-end rates in the near term, but the absence of new liquidity measures suggests that the Fed is comfortable with current conditions. Overall, the tone remains cautious but measured. We view this as a benign, non-market moving statement.”

Jack McIntyre, portfolio manager, Brandywine Global
“At a time when it’s flying with only one eye open, the Fed decided that the softening in the labor market is a bigger concern than the stickiness of inflation. This stance makes sense given that labor statistics are lagging economic indicators and monetary policy works with a lag. So for October, the Fed wanted to err on the side of a further rate cut. What makes less sense is the odd range of dissents. Miran’s call for a larger cut could be dismissed as too dovish. But Schmid's call for no cut combined with Powell’s comments during the press conference, in which he said he wants to put some daylight between the Fed’s view of potential future rate cuts with the market's view for December, can’t be easily dismissed. This divergence means less complacency in financial markets, more volatility, and more two-way flows.”

Daniel Murray, deputy CIO and global head of research at EFG
“Given the lockdown data drought, the fact that US inflation remains stubbornly above target whilst the labor market remains tight and the corporate sector appears to be booming, an intelligent alien who had some joint knowledge of economics and the Fed's mandate would have been forgiven for anticipating a Fed on hold or in tightening mode. However, in practise that was not to be, reflecting a rebalancing in the Fed's reaction function away from fighting inflation toward the full employment dimension of its mandate. Subconsciously, it is possible that the Fed has been influenced by pressure from US President Donald Trump administration's, particularly following the recent appointment of Stephen Miran to the Federal Open Market Committee .

“By the time of the next FOMC meeting on December 9 and 10, it is hoped and expected that the government shutdown will be over. This will mean that more data should be available to allow the Fed to make a better-informed policy decision. The November FOMC decision can therefore be viewed as an insurance cut, partly mitigating against the tentative signs of labor market softening referred to in the statement and partly due to the potential for the economic uncertainty caused by the shutdown to have a more profound impact than is currently expected.”