Is It a Unicorn

Fed’s Soft Landing in Sight—But is it a Unicorn in the Wild?

As we head into the year’s final quarter, Investors are signaling optimism for a soft landing—a rare feat achieved just once in the last 43 years (thanks, Greenspan). The markets are currently pricing in an 79% chance of a soft landing. But let’s not forget, soft landings are tricky, and while optimism is good, uncertainty is still hanging in the air.

The Fed expected Rate Cuts Ahead:

Investors are forecasting the Fed to deploy gradual Fed Funds rate cuts—50 bps this year, 100 bps in 2025, and additional cuts in 2026, aiming for a 2.9% terminal rate by 2027 (down from the current 5% rate). This steady approach is expected to prevent the labor market from cooling too fast while keeping inflation in check.

It might be a fairytale landing but expect some turbulence as the Fed prepares for those rate cuts. Markets are currently betting on a 50/50 chance of 200 basis points (bps) worth of cuts over the next eight months. Since this is contrary to the above 150 plan over the next 15 months, this could lead to increased market volatility. That means mortgage rates will ping pong around until investors are in line with the plan.

2025 Mortgage Rate Projections:

Most experts are currently forecasting rates to drop to the high 5% range by next spring. That’s good news if you’ve been eyeing your refi pipeline, but the gap between market expectations and the Fed’s projections creates a fertile ground for uncertainty. This forecast is highly dependent on 4th Quarter economic data, particularly the jobs reports and inflation data and bond investors betting in line with the Fed’s plan.

The Savings Shortfall: A Red Flag

Americans have burned through their savings, something we’ve only seen during the 2008 crisis and 2020 pandemic. With savings depleted, spending could slow, threatening economic growth in the months ahead. This is a crucial trend to watch.

Housing Market: Stabilizing, as Inventory Grows

Housing is cooling but moving toward stability. Inventory is up to 4.2 months, and homes are taking longer to sell—an average of 53 days. While the increase in inventory is a healthy sign of a more normalized market, mortgage payments are still 7% higher than in 2022 and 53% higher than 2021, keeping affordability tight for some buyers.

Bottom Line

The Fed’s soft landing is looking more likely than ever, but it’s still a high-wire act. As rate cuts loom and markets react, it’s important to stay informed and ready for shifts. The path forward might be smoother than anticipated but expect a few bumps along the way.

Notes that Resonated

God removes things to reveal things… loss always leads to opportunity
Life is like a journey; you need to change directions a few times to get where you want to go
Failure teaches what comfort can't
Skipping the work means skipping the progress
Reliability is essential for progress: you will guarantee a life of misery if you live a life of being unreliable (Charlie Munger)
Be reliable to yourself
What you focus on, you create more of – whatever your mindset… attracts more of the same.
If you keep the same experiences, your mind will keep the same patterns – Same inputs get the same outputs... Break the cycle to grow
God never makes you wait for no reason. Trust his timing.
Money is a renewable resource: shift from scarcity to abundance mindset

Things to read

Videos to watch

Stand out in your market with Unreasonable Hospitality:

Top Quotes

“Let us run with endurance the race that is set before us, looking to Jesus, the founder and perfecter of our faith.” — Hebrews 12:1
"If you don’t flex, you lose your flexibility." — Derek Sivers
"Reputation is like a shadow. Sometimes it's bigger than you, and sometimes it's smaller." -unknown
“It’s not whether you win or lose, it’s how you place the blame.” - Oscar Wilde

Food & Drink

There is something special about making homemade bread. This recipe is fairly easy and very delicious. But like with every bread recipe you must follow it to the T.

Pain de Mie Sandwich Bread