So I called the Fed cutting more aggressively in 2025 than most people thought, and it actually played out pretty close to what I expected. They ended up with 75 basis points of cuts total instead of the single 25bp everyone was pricing in back in January. The reasoning checked out too — inflation cooling down, economic softening — exactly what I was watching.

Now we're heading into 2026 and honestly, the consensus expectations feel way too conservative again. The market's currently expecting maybe 50 basis points of cuts this year, which basically means two rate cuts across the Fed's eight meetings. I think that's underestimating what's actually happening in the economy right now.

Here's my take on where interest rates are actually headed. First, I'm predicting the Fed goes for four cuts minimum in 2026. Right now the market is only pricing in an 11% probability of that happening, but given the job market pressures and broader economic uncertainty we're seeing, I think it's way more likely. Plus you've got the leadership transition with Powell's term ending, which adds another layer of complexity.

Second, the 10-year Treasury yield is sitting at 4.19% as I write this, which is actually higher than it was mid-2024 when the Fed funds rate was way higher. That disconnect doesn't make sense to me. I'm predicting a sharp drop — we're going to see that 10-year yield fall below 3.5% by end of year. That's something we haven't seen since early 2023. This matters because it directly impacts dividend stocks, REITs, and corporate borrowing costs.

Third prediction that's probably the most controversial: mortgage rates are going to see real relief. Most of the experts are saying we'll see maybe a small dip, with the Mortgage Bankers Association predicting rates stick around 6.4% for most of 2026. I think that's way off. I'm calling for 30-year mortgages to drop to 5.5% by year-end. That's a meaningful shift.

Look, I'm not pretending to have perfect foresight here. But the conditions are lining up for a significantly lower-rate environment than what most people are currently expecting. The economic data supports it, and the pressure on the Fed to cut is building. Worth paying attention to as we move through the year.