Fed Shifts Toward Easing as Growth Slows and Labor Risks Rise

This commentary by Nuveen’s Fixed Income Strategy team analyzes the Federal Reserve’s September rate cut and its implications for investors.

• The Fed cut rates by 25 bps to 4.00–4.25%, with its dot plot now signaling 50 bps of additional cuts in 2025 as labor market risks intensify.

• Growth remains positive but is moderating, with unemployment projected to reach 4.5% and core PCE inflation peaking just above 3% by year-end.

• Investment opportunities include shorter-duration fixed income, securitized credit, real estate recovery plays, municipal bonds, and AI-driven technology equities.

How should portfolios be rebalanced to capture opportunities across both defensive and growth assets in this shifting policy environment?