An interesting shift has occurred. Morgan Stanley has recently changed its stance again—they now believe the Fed will take action at the December meeting and cut rates by 25 basis points.

Previously, due to the strong September employment data, they had completely withdrawn their rate cut expectations, even thinking it might have to wait until 2026. But now? Analysts Michael Gapen and Sam Coffin released a report last Friday, stating that the key lies in the signals the Fed gave before entering the blackout period.

With this reversal in attitude, the market will have to reassess its liquidity expectations. After all, once a rate cut is implemented, the playbook for risk assets might change again.