Q4 Game Plan & Outlook

We’re about 45 days from the close of Q3 and roughly a month away from the next FOMC decision on rate cuts. Few narratives have dominated market conversations this year more than the interest rate environment and specifically, the theory that a reduction in the federal funds rate will create a broad risk-on rally in equities.

This expectation is not confined to retail speculation. It has been echoed across Wall Street desks, research notes, and investor outlooks since the first cuts in late 2024. The idea is simple: lower rates reduce the cost of capital, encourage borrowing, and make equities relatively more attractive compared to fixed income. But as the past year has shown, theory and reality don’t always align.