Top-Level Takeaways

• Financial market jitters increased in February amid heightened AI disruption fears and geopolitical tensions.
• The U.S. and Israel launched a major military operation against Iran, sending oil prices and Treasury yields sharply higher.
• Speculation that AI advancements posed a threat to traditional software companies sparked fears in both equities and private credit.

Financial market jitters escalated in February, even as economic data releases remained generally encouraging.

Two issues have primarily driven market anxiety: AI disruption fears and geopolitical tensions. The latter came to fruition this past weekend when American and Israeli forces launched a major joint military campaign against Iran, reportedly killing much of the nation’s senior leadership.

The initial market reaction included sharply higher oil and natural gas prices, a selloff in equities, and higher global bond yields. The latter was attributable to inflation concerns from higher energy prices. The Strait of Hormuz, just off the coast of Iran, was effectively shut down, cutting off the distribution channel for 20% of the world’s daily oil and light natural gas consumption. It will likely take some time for the dust to settle and markets to get a better idea of the ultimate objectives and potential timeline for U.S. military operations.

Before the U.S. military action on Iran, risk markets had been reeling from worries that accelerating AI development, particularly agentic systems, could cause significant disruption to many white-collar industries, most notably the software as a service (SaaS) sector. The S&P 500 posted its first negative monthly return since last April amid tariff volatility, and the tech-heavy Nasdaq composite index dropped 3.3% in February. The software and services sub-index of the S&P 500 produced a -10% return in February, illustrating the heightened SaaS concerns, and the index is down nearly 21% through the first two months of 2026.

Visit ALM First to read more about the latest economic data and overall monthly market trends.

Jason Haley joined ALM First in 2008 and is the firm’s chief investment officer. He heads ALM First’s Investment Management Group (IMG), which is responsible for leading the investment process and investment theme development. Haley also oversees all capital markets activities, including portfolio management, trading, market research and commentary, and execution of hedging and funding strategies for the firm’s depository clients. He holds an MBA with a concentration in finance and a BBA with a concentration in marketing, both from The University of Mississippi.

Not an offer for investment advisory services. This content is provided for general educational information and market commentary purposes only.

The post Financial Market Jitters Escalate appeared first on CreditUnions.com.

The Innovation Series is celebrating 2026 with a diverse slate of finalists whose breakthroughs are reshaping member experience, data and business intelligence, lending, employee engagement, fraud prevention, and digital member engagement — all with the power to help credit unions thrive in a rapidly evolving marketplace. Register for the Innovations In Fraud Prevention And Resolution webinar on Thursday, March 17th at 2PM EST.

Read on to learn more about this year’s finalists in fraud prevention and reduction: illuma, Quavo, Quinte, TTEC Digital.

illuma

Describe your innovation.

Illuma’s latest fraud risk flagging feature closes a critical gap in credit union contact center fraud-management operations by extending IllumaSHIELD beyond authentication into real-time fraud risk awareness and response. The solution blends human insight with automated pattern detection, allowing agents and AI to collaboratively flag risky accounts, phone numbers, and voiceprints as threats emerge. When flagged activity is encountered, agents receive instant alerts, while supervisors and fraud teams can review, manage, and act on risk indicators through a centralized portal — eliminating manual reporting and disconnected monitoring processes.

What opportunity or challenge does it address?

Credit union contact centers remain a prime target for increasingly sophisticated fraud. While technologies like IllumaSHIELD have transformed member authentication, many institutions still rely on slow, manual, and fragmented processes — emails, chat messages, spreadsheets, or institutional memory — to report and share information about suspected fraud. These ad hoc workflows fail to scale, create blind spots across teams, and leave gaps that fraudsters can exploit.

How does it increase member value?

Fraud risk flagging empowers agents to confidently assist legitimate members while handling higher-risk interactions with appropriate caution. By removing manual reporting burdens and uncertainty, agents stay focused, composed, and efficient — leading to faster resolutions and more consistent member experiences.

For members, the value is twofold: convenience and protection. Legitimate callers experience friction-free phone banking when no risk is present, while suspicious behavior is identified earlier and addressed proactively. The result is greater trust in a holistic voice security approach that safeguards members without compromising accessibility or service quality.

What differentiates this innovation from competitors?

Unlike many fraud tools that introduce operational complexity, fraud risk flagging is designed to be easy to use, simple to manage, and immediately valuable without requiring dedicated staffing or specialized expertise. The intuitive user interface allows agents and managers to act on risk confidently without adding new workflows, monitoring teams, or manual alert triage.

The solution fits natively into IllumaSHIELD, extending value from an existing deployment rather than layering on another standalone system. It recognizes that agents are a critical part of a credit union’s fraud defense and makes that role easier — allowing them to focus on serving members instead of managing alerts or reports.

Importantly, fraud risk flagging is purpose-built for credit unions of all sizes. It delivers the same protection for low call-volume and smaller operations while scaling seamlessly as demand grows—without customization, lengthy deployments, or additional resources often required by solutions designed primarily for large enterprises.

Quavo

Describe your innovation.

Quavo has introduced Aria, who is our super-agent working within Quavo Fraud and Disputes (QFD), our fraud and dispute management platform. Aria, armed with advanced AI, business logic, and best-in-class integration capability, is constantly at work in the system automating work that is traditionally done manually by users. In addition, Aria also analyzes Quavo’s extensive data repository on past dispute actions and examines user work, recommending actions to take as they are performing their tasks. Aria is a coach, a protector, an automator of work, and a manager of resources, routing the most important work to users.

What opportunity or challenge does it address?

Fraud and disputes are a very complex use case at a credit union. When something goes wrong with a payment or a member doesn’t recognize a transaction, it can be difficult to make it right. The challenge is even greater doing this at scale. Aria ensures members receive quick and fair resolutions, creating significantly better outcomes for both the credit union and members alike.

How does it increase member value?

When a member has an issue with a purchase they made or is the victim of fraud, it is a moment that matters in their relationship with their credit union. Aria not only automates large amounts of work, she allows the credit union staff the ability to focus on making the right decisions, making sure that compliance is a given, and focusing on what truly matters: the member experience.

What differentiates this innovation from competitors?

Quavo has been in this industry for over a decade. We are not just software providers. We are partners, and we are experts at getting to know your business, how you want to treat your members, and how to bring industry best practices into your business. When it comes to AI and innovation, we have created datasets that simply do not exist anywhere else in the industry, which power extremely accurate and tested recommendations and automated actions.

Quinte

Describe your innovation.

Quinte’s flagship solution, CaseHUB, is an AI-driven case management orchestration platform engineered to automate disputes, fraud, and complaints in a centralized cloud-based system. By replacing fragmented and disconnected processes with intelligent orchestration, CaseHUB delivers a configurable, end-to-end solution for enterprise case management on a single, coordinated platform.

The platform is comprised of three modules designed to streamline modern case management:

• CaseHUB For Disputes reduces handling time by up to 40% through end-to-end automation across all payment types, including card, digital, ATM, ACH, EFT, and check. Built-in regulatory timelines ensure compliance, while communications and ledger activity are automated within the platform. Agentic AI further streamlines dispute resolution by auto-triaging and resolving low-risk disputes. Combined, these capabilities are strategically deployed, empowering staff to enhance engagement points with members while safeguarding the credit union.
• CaseHUB For Fraud unifies payment and non-payment fraud into a single investigative workspace. Investigations can be more proactively managed through auto case creation and sound throughputs. Additionally, SAR filing capabilities and link analysis enable teams to identify patterns and trends across related cases. For check fraud, CaseHUB leverages image forensics AI to deliver accurate detection of signature mismatches, amount tampering, and altered items.
• CaseHUB For Complaints strengthens member experience and institutional reputation by offering flexible, configurable intake options that meet members where they are. Credit unions can customize dynamic forms tailored to business lines, risk categories, or workflow needs, ensuring complaints are captured accurately and without friction. Members can submit complaints through mobile, web, email, phone, or at a branch.

CaseHUB brings these innovations together to deliver the best-in-class standard expected from leading financial service providers, backed by Quinte’s business process management and data analytics support.

What opportunity or challenge does it address?

Credit unions often struggle with fragmented tools and legacy silos when managing operational cases, particularly in areas like fraud, disputes, and compliance. As volumes and complexity rise, these disjointed systems hinder teams’ ability to maintain consistency, visibility, and control. CaseHUB offers credit unions a powerful opportunity to prioritize meaningful member engagements while adopting a more productive, efficient, and enterprise-wide approach to compliance and operations.

To overcome these challenges, credit unions need a standardized, unified system of work that provides end-to-end visibility, enabling teams to identify, prioritize, and automate high-impact tasks with built-in governance. Quinte Financial Technologies delivers this through CaseHUB, its cloud-based, AI-powered enterprise case management platform. It orchestrates the automation of every case, task, workflow, and audit within a single, intuitive system by streamlining operations, ensuring regulatory compliance, and enhancing overall efficiency.

By centralizing operations, CaseHUB reduces redundant steps, enforces consistent workflows, and ensures every case aligns with institutional policies and regulatory requirements. Teams gain complete audit trails and cross-departmental visibility.

How does it increase member value?

Quinte knows member trust is paramount for credit unions and that trust weakens when investigations stall or when members receive inconsistent updates due to fragmented, outdated tools. CaseHUB provides avenues for more focused and insightful engagement with members.

CaseHUB addresses this challenge by orchestrating the automation of investigations across all case types within a single, cloud-based system. This exclusive capability, a single investigative workspace, elevates member sentiment by replacing complexity with clarity and consistency across every interaction.

For one of the largest credit unions, CaseHUB closed long-standing gaps between different fraud types. The credit union has adopted CaseHUB specifically to unify fraud investigations, giving teams consistent visibility across related cases that were previously managed in parallel systems.

Another California-based credit union describes CaseHUB as a “gamechanger” for fraud management. By consolidating all fraud case activity into a single system, teams are able to identify emerging patterns quickly, respond more effectively, and improve investigative accuracy through stronger visibility and coordination.

Across both credit unions, the impact is tangible. Members feel protected, issues are resolved faster, and service quality remains strong as volumes grow. By transforming fragmented investigations into coordinated, transparent experiences, CaseHUB enables scalability and reinforces trust at every touchpoint.

What differentiates this innovation from competitors?

CaseHUB differentiates itself as an enterprise case management platform by bringing cloud-based orchestration and automation to compliance. While most systems focus on a single case management function, CaseHUB manages the full lifecycle for multiple case types from the moment they enter the credit union through final resolution. Additionally, our ServiceDESK is an embedded CaseHUB feature that accelerates resolutions, reduces costs, and scales compliance.

In the current market, most solutions are designed to address only one part of the problem. Some solutions focus on disputes, others on fraud alerts, check analysis, or complaint intake. These systems operate independently and stop short of managing the full investigation and resolution process, leaving credit unions to bridge the gaps with manual handoffs, spreadsheets, and disconnected workflows.

CaseHUB serves as the strategic bridge solution, eliminating swivel-chair moments and replacing multiple tools with a single 360° investigation backbone for the enterprise. Disputes, payment and non-payment fraud, check fraud, and complaints are orchestrated within one system of record, ensuring investigations move seamlessly across teams rather than breaking at system boundaries.

This enterprise foundation also delivers cross-team visibility for leadership. Rather than assembling updates from different platforms, leaders can see case progress, risk exposure, and outcomes across all investigation types in one place, enabling better oversight and prioritization. Customized reports can be generated using built-in business intelligence and delivered to your inbox on a daily, weekly, monthly, or quarterly basis.

CaseHUB further optimizes execution through AI-driven case summaries and SAR narratives, reducing manual effort while maintaining consistent, audit-ready documentation. Automating cases across the lifecycle results in faster resolution, clear ownership, and traceability that supports operational efficiency at scale.

TTEC Digital

Describe your innovation.

TTEC Digital’s SmartApps Cloud is an intelligent, cloud-based fraud orchestration platform purpose-built for the credit union contact center.

What opportunity or challenge does it address?

Rather than relying on a single authentication method, SmartApps Cloud unifies device-, voice-, and identity-verification into a single, seamless workflow that authenticates members in real time, often before an agent even answers the call. What makes SmartApps Cloud innovative is not just the individual technologies, but how they are orchestrated together. By integrating TransUnion Authenticator Plus, VoxEQ voice biometrics, and IDgo device-based authentication, SmartApps Cloud transforms complex, multi-layered fraud defenses into an invisible, automated experience for members. The platform dynamically applies the right level of authentication based on risk, allowing legitimate members to move quickly while stopping sophisticated threats such as AI-driven scams, deepfake voices, and repeat fraudsters. This orchestration-first approach modernizes contact center security, replacing static, knowledge-based authentication with a future-ready, adaptive fraud framework that continuously evolves alongside emerging threats.

How does it increase member value?

SmartApps Cloud enables credit unions to deliver a rare combination members expect but rarely experience: strong security without friction. By authenticating members through passive and password-less methods, SmartApps Cloud dramatically reduces the need for repetitive security questions, long verification times, and call transfers, resulting in faster resolutions and a more respectful member experience.

From a member perspective, the value is immediate and tangible:

• Faster access to help – Many members are verified before the call connects, reducing handle time and frustration.
• Greater peace of mind – Advanced fraud protection reassures members that their financial identity is protected, even against emerging AI-driven threats.
• Consistent, seamless experiences – Authentication feels effortless and transparent, reinforcing trust rather than creating friction.

For credit unions, this translates into stronger member trust, higher satisfaction, and reduced fraud losses — without sacrificing the personalized service model that differentiates them from large banks. SmartApps Cloud allows credit unions to protect what matters most while strengthening the member relationship at every interaction.

What differentiates this innovation from competitors?

SmartApp’s Cloud combines numerous best-in-market solutions, creating a multilayered fraud prevention solution.

Check Out The Other Innovation Series Categories

• Employee Enablement
• AI-Powered Member Experience
• Data And Decision Intelligence
• Reimagining The Lending Experience
• Digital Member Engagement

The post Meet The Finalists For The 2026 Innovation Series: Fraud Prevention And Resolution appeared first on CreditUnions.com.

Top-Level Takeaways

• Financial markets responded to multiple noteworthy announcements in January, including the nomination of the next Fed chair.
• In an effort to lower mortgage rates, President Trump directed Fannie Mae and Freddie Mac to purchase $200 billion of mortgage securities.
• President Trump also nominated Kevin Warsh, a former Fed governor, as the next Fed chair despite Warsh being considered more hawkish in the past.

The first month of 2026 included multiple announcements consequential for the bond market and financial markets as whole.

President Trump and his team proposed multiple policy efforts aimed at improving affordability ahead of the midterm elections later this year, including a one-year 10% cap on credit card interest rates, a ban on institutional homebuying, and a $200 billion mortgage-backed securities (MBS) purchase program by Fannie Mae and Freddie Mac (FMs).

The credit card interest rate cap is perhaps the most controversial given the potential negative consequences on credit availability. However, market participants were relieved when President Trump suggested he would rely on Congress to pass a law to cap such rates, which is considered a less likely outcome.

On Jan. 8, Trump directed Fannie Mae and Freddie Mac to purchase $200 billion of MBS with the ultimate objective of driving mortgage rates lower. The administration has provided limited details, but it’s worth noting that the FMs had been buying MBS for several months, most recently at a pace of around $16 billion per month, an annualized amount of nearly $200 billion. The most recent disclosures showed the FMs bought $24.6 billion in December.

Agency MBS spreads tightened on the news, with 30-year conventional coupons trading closest to a par dollar price (e.g., 30-year 4.5% and 5.0% pools) moving the most (10 to 15 basis points versus Treasuries). However, in a typical “buy the rumor, sell the fact” trade, spreads retraced approximately half of that move during the remainder of the month, particularly after Bill Pulte, the director of the Federal Housing Finance Agency, said there would be no increase to the total purchase program size of $200 billion.

Visit ALM First to read more about the latest economic data and overall monthly market trends.

Jason Haley joined ALM First in 2008 and is the firm’s chief investment officer. He heads ALM First’s Investment Management Group (IMG), which is responsible for leading the investment process and investment theme development. Haley also oversees all capital markets activities, including portfolio management, trading, market research and commentary, and execution of hedging and funding strategies for the firm’s depository clients. He holds an MBA with a concentration in finance and a BBA with a concentration in marketing, both from The University of Mississippi.

Not an offer for investment advisory services. This content is provided for general educational information and market commentary purposes only.

The post Markets React To Consequential Announcements appeared first on CreditUnions.com.

Rising interest rates have flipped the traditional credit union investment playbook upside down – transforming the “safe” side of portfolios into a source of embedded losses and constrained flexibility. Fixed-income, which once signaled stability, has become a structural drag on performance.

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The post No More Paper Losses –A Modern Investment Approach for Credit Unions appeared first on CreditUnions.com.

Even with recent rate cuts, those embedded paper losses remain stubbornly high. Moving from near‑zero rates to 5.25% in record time created a deep mark on portfolios, and modest easing has barely chipped away at it. No one expects a return to zero rates, which means patience alone is not a strategy.

A Modern Framework For Safety

Elite Capital Management Group employs structured protection within the framework of the long‑standing zero‑cost collar strategy. At its core, this means owning the underlying exposure, buying a put to establish a floor, and selling a call to fund that protection. The result is a defined loss threshold with participation in upside returns up to a predetermined cap.

For decades, this framework has successfully established floors and ceilings, allowing institutions to participate in equity growth while insulating against declines. Today, it has been packaged into a daily liquid investment vehicle, bringing transparency, liquidity, and accessibility to a proven concept.

Why This Is A Big Deal For Credit Unions

Many credit unions rely heavily on bonds across multiple investment account types. Although fixed income plays an important role, over-allocating to bonds presents meaningful challenges:

1. Limited Long-Term Total Return Potential — Bonds have historically underperformed other asset classes over long time horizons. Although they tend to exhibit lower volatility, excessive reliance on fixed income increases the risk of “growing poor safely.” In an environment of persistent inflation uncertainty, institutional investors must prioritize real returns — returns after inflation.
2. Concentrated Interest Rate Risk — As a financial institution, most components of a credit union’s balance sheet are sensitive to interest rates. Over-allocating to bonds provides little diversification from this risk and can amplify balance sheet vulnerability during rate shifts.

Structured protection strategies offer credit unions the potential for higher long-term total returns than bonds while muting the volatility and downside risk traditionally associated with equities. Importantly, these strategies are not interest rate sensitive, providing meaningful diversification across risk exposures.

Not Insurance, Not Annuities

Structured protection is entirely market‑driven. Unlike insurance‑based products such as BOLI or annuities, it offers transparency, liquidity, and audit‑friendly implementation — qualities that matter for boards and regulators. As an SEC‑registered fiduciary, Elite Capital focuses exclusively on strategies that credit unions can evaluate, model, and trust.

The Path Ahead

Rate cuts alone won’t erase embedded losses, and waiting for a return to zero is not realistic. Structured protection offers a modern way forward: equity participation with defined downside protection, diversification beyond bonds, and a transparent, liquid format that aligns with fiduciary duty.

Since 2007, Elite Capital has provided credit unions access to the kind of institutional investment strategies available to large financial institutions without being tied to insurance products or hidden commissions. As a pioneer of employee benefits pre-funding, its goal is to deliver purpose-built portfolios that align with the mission, regulatory structure, and accounting needs of credit unions. Learn more at elitecapgroup.com.

The post What Was Once A Safe Corner Of Credit Union Portfolios Is Now A Source Of Pain appeared first on CreditUnions.com.

Top-Level Takeaways

• 2026 begins similarly to 2025 as it relates to general economic and market sentiment.
• Watch for three economic themes for the upcoming year, from policy expectations to the digital infrastructure boom.
• As with all forecasts, there are risks in both directions.

We begin 2026 similarly to the year prior as it relates to general economic and market sentiment. While various pockets of worry and uncertainty persist, economists’ forecasts entering the new year are largely optimistic. The median economist forecast on Bloomberg for key economic metrics could best be described as “steady” in 2026. It was a strong year for most financial assets in 2025, and if the economy were to track current expectations, it would be another solid year.

Below are some economic themes we will be tracking over the next 12 months, followed by potential risks and more optimistic expectations.

1. A Quieter Policy Year

One of our 2025 themes was “messier than expected.” While markets focused on the Trump administration’s views on taxes and regulation as a strong economic tailwind, we worried that other policy decisions, particularly tariffs, could prove messy. As we enter 2026, and the consequential midterm elections loom later this year, we expect less noise on the policy front.

The Supreme Court has yet to rule on the legality of reciprocal tariffs using an emergency powers act. Regardless, the White House will likely try to avoid any new actions that spark a negative reaction from financial markets, whether trade, immigration, or other policy issues. If this proves true, it could lead to increased business investment, which lagged in 2025 for everything but data center build outs.

2. Digital Infrastructure Tailwind

Continuing that last thought, we saw a major uptick in digital infrastructure spending in the second half of 2025 for everything from computers and software to data and power centers. Up to this point, large technology companies had largely funded these expenditures with free cashflow, but that changed in 2025 with large corporate debt issues by companies like Oracle, Google, and Meta. We also saw a notable increase in securitized debt issuance for financing data centers, and this issuance is expected to accelerate in 2026.

While there are ample worries about the speed at which AI development is occurring and the associated costs, the spending should be a tailwind for overall economic growth this year. However, the notable debt supply will act as a headwind for fixed income spreads across several sectors, including corporate debt and asset-backed securities (ABS).

3. An Ongoing Struggle For Low-Income Households

As the year progressed, there were more references to a “K-shaped” economy in articles and media reports. This describes an economic expansion where high-income households thrive and low- and middle-income households struggle. Elevated inflation hits lower earners most, and consumer delinquencies have been more elevated relative to historical trends for borrowers with lower credit scores.

While inflation could slow modestly in 2026, it is unlikely that wage growth could accelerate enough to materially improve the current affordability issues for many low- and middle-income consumers. As such, credit risk will remain elevated for loans to these borrowers.

Visit ALM First to read more about the latest economic data and overall monthly market trends.

Jason Haley joined ALM First in 2008 and is the firm’s chief investment officer. He heads ALM First’s Investment Management Group (IMG), which is responsible for leading the investment process and investment theme development. Haley also oversees all capital markets activities, including portfolio management, trading, market research and commentary, and execution of hedging and funding strategies for the firm’s depository clients. He holds an MBA with a concentration in finance and a BBA with a concentration in marketing, both from The University of Mississippi.

Not an offer for investment advisory services. This content is provided for general educational information and market commentary purposes only.

The post 2026 Begins With Market Sentiment Similar To 2025 appeared first on CreditUnions.com.

Top-Level Takeaways

• It has been a noisy year for financial markets and the economy, but performance across several metrics has proven resilient.
• There is little consensus on the future path of the economy among Fed leaders and Wall Street economists.
• Credit union and bank profitability remained solid in 2025 amid widening interest margins and stable credit performance

A word we have used often to characterize financial markets and the economy in 2025 has been “noisy.”

A simple, yet technical definition of noisy is “accompanied by or introducing random fluctuations that obscure the real signal or data.” In this context, the real signal or data could be economic growth, the unemployment rate, performance in equity and fixed income markets, or the financial performance of banks and credit unions. The obscurities could be tariffs, threats to Fed independence, geopolitical tensions, and the longest government shutdown in U.S. history. To be clear, each of these could prove to have true economic costs rather than being merely distractions. However, thus far, the bark has been greater than the bite.

Although ample sources of economic uncertainty and worry persist, the same could be said for economic opportunity. As such, there is a wide dispersion of potential outcomes forecasted by Wall Street economists and Fed leaders alike.

The latter has been a heightened area of focus for financial markets in recent months as they try to assess whether the FOMC might be pivoting to a less dovish, or more hawkish, policy path. The minutes of the October 29 FOMC meeting and recent speeches by various Fed leaders suggest a growing contingent more worried about lingering inflation risk. However, as of Monday, the fed funds futures market showed a 100% probability of a December cut and nearly 100 basis points of rate cuts over the next year.

If the labor market proves to be on firmer footing than what the FOMC doves seem to believe, this scenario presents upside risks to bond market yields. However, if business investment remains subdued and unemployment rises, the Fed is more likely to continue lowering the policy rate, as is currently priced by fixed income markets. As always, interest rate directionality scenarios are relative to what is already accounted for in current yields across the curve.

Visit ALM First to read more about the latest economic data and overall monthly market trends.

Jason Haley joined ALM First in 2008 and is the firm’s chief investment officer. He heads ALM First’s Investment Management Group (IMG), which is responsible for leading the investment process and investment theme development. Haley also oversees all capital markets activities, including portfolio management, trading, market research and commentary, and execution of hedging and funding strategies for the firm’s depository clients. He holds an MBA with a concentration in finance and a BBA with a concentration in marketing, both from The University of Mississippi.

Not an offer for investment advisory services. This content is provided for general educational information and market commentary purposes only.

The post It’s Been A Noisy, Yet Resilient Year For The U.S. Economy appeared first on CreditUnions.com.

Top-Level Takeaways

• The Fed executed a 25-basis-point rate cut on Oct. 29, but forward guidance was less clear.
• Fed releases and public speeches highlight a sharp divide between FOMC hawks and doves regarding inflation and labor market risks.
• Headlines have brought pockets of credit markets into focus, including increased lending by commercial banks to non-bank financial institutions.

The FOMC moved forward with another 25-basis-point rate cut on Oct. 29. That cut was expected, but the forward outlook is a bit murkier.

Heading into the meeting, the fed funds futures market was pricing 100% probability of a December rate cut, followed by another 100 basis points of cuts in 2026. In a speech before the annual National Association for Business Economics (NABE) conference on Oct. 14, Jerome Powell had an opportunity to push back on market pricing, but the chair of the Federal Reserve instead focused on the role and size of the Fed’s balance sheet.

Powell then struck a notably different tone at the press conference following the Oct. 29 FOMC meeting.

“In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December,” Powell said in his opening remarks. “A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it.”

The updated Summary of Economic Projections (SEP) released following the Sept. 17 FOMC meeting revealed a wide range of opinions on where the federal funds rate would end 2025, as well as the long-run neutral rate. In the speeches that followed that meeting, more dovish Fed leaders expressed concern that recent labor market softening was a harbinger for weaker GDP and reduced inflation in the months ahead. On the other hand, Fed hawks characterized the September cut — and the likely cut on Oct. 29 — as insurance against further weakness in the labor market. At the same time, they expressed hesitancy about doing much more policy easing amid ongoing inflation uncertainty.

This debate was clearly alive and well during the Oct. 29 meeting, which Powell even suggested should be clearer when the minutes are released. During the press conference, Powell said he believes most of the slowdown in hiring is more attributable to supply-side factors (labor participation and immigration) as opposed to the demand side of the equation (business investment). Fed policy typically has less impact on labor supply and more on labor demand. This is likely a critical factor in the current outlook of Fed hawks.

Visit ALM First to read more about the latest economic data and overall monthly market trends.

Jason Haley joined ALM First in 2008 and is the firm’s chief investment officer. He heads ALM First’s Investment Management Group (IMG), which is responsible for leading the investment process and investment theme development. Haley also oversees all capital markets activities, including portfolio management, trading, market research and commentary, and execution of hedging and funding strategies for the firm’s depository clients. He holds an MBA with a concentration in finance and a BBA with a concentration in marketing, both from The University of Mississippi.

Not an offer for investment advisory services. This content is provided for general educational information and market commentary purposes only.

The post Forward Guidance Less Clear After October Rate Cut appeared first on CreditUnions.com.

Top-Level Takeaways

• • Recent data suggests U.S. economic fundamentals remain relatively solid.
  • Consumers are not slowing down on spending amid solid income growth according, to September reports.
  • The range of FOMC participant opinions of the neutral policy rate is historically wide, with some feeling the current rate is only mildly restrictive.

The economic data released in September painted a picture of an economy on firmer footing than many expected amid the noisy headlines of 2025. The third estimate of second quarter GDP was revised higher to 3.8% quarter-over-quarter (annualized), the highest reading since the fourth quarter of 2021.
Although trade-related metrics from the first quarter clearly impacted that headline figure, there were also upward revisions to consumer spending and business investment. If excluding the impact of trade (including inventories), final sales to domestic purchasers were revised up to 2.4% from an initial estimate of just 1.1%. This metric is sometimes referred to as “core GDP,” and while still below the 3.35% average for 2023-2024, it shows no signs of imminent recession.
August personal income and spending data also revealed no signs of a softening consumer balance sheet. Real disposable income (ex-taxes/inflation) rose 0.1% in August and is on pace for a 1.9% increase in 2025 compared to 2.1% in 2024. Spending also outpaced expectations on both a nominal and inflation-adjusted basis.
Real consumer spending was negative for the first two months of the year amid heightened uncertainty before bouncing back. After adjusting for inflation, spending has averaged 0.37% growth in the past three months, or 1.47% annualized. The personal savings rate (income – spending) rose from 4.3% to 5.7% in the first four months of 2025 and has since fallen to 4.6% through August.
Sentiment surveys have been relatively weak in 2025, with many respondents pointing to tariffs as a primary worry, but it hasn’t yet been enough for consumers to slam the brakes on spending.

Visit ALM First to read more about the latest economic data and overall monthly market trends.

Jason Haley joined ALM First in 2008 and is the firm’s chief investment officer. He heads ALM First’s Investment Management Group (IMG), which is responsible for leading the investment process and investment theme development. Haley also oversees all capital markets activities, including portfolio management, trading, market research and commentary, and execution of hedging and funding strategies for the firm’s depository clients. He holds an MBA with a concentration in finance and a BBA with a concentration in marketing, both from The University of Mississippi.

Not an offer for investment advisory services. This content is provided for general educational information and market commentary purposes only.

The post The U.S. Economy Is On Firmer Footing Than Expected appeared first on CreditUnions.com.

Top-Level Takeaways

• • Financial markets have been mostly immune to political headline noise in recent months.
  • The White House ratcheted up its efforts to exert more influence over the Fed in August with Trump’s firing of Fed Governor Lisa Cook “for cause.”
  • Fed Chair Jerome Powell’s Jackson Hole speech was more dovish than many expected, increasing the odds of a September rate cut.

August is typically a quiet month in terms of financial market activity as vacation season winds down. Although there is no shortage of headline noise in the current climate, last month proved to be relatively sleepy in the bond market with the range of intra-month Treasury yields in August the least volatile since March despite plenty of Fed-related headlines and economic data releases. The month kicked off with a disappointing July jobs report that included a massive -258,000 revision to payroll growth estimates for the prior two months. For the bond market, it meant pricing in an extra 25 basis point rate cut in the next 12 to 18 months and more fully pricing in a September cut.

Speaking of the Fed, the White House’s campaign to exert more influence over the central bank ratcheted up in August. Earlier in the month, FHFA Director Bill Pulte posted a letter he had sent to Fed Governor Lisa Cook alleging mortgage fraud on social media. The allegation involves Cook listing two separate properties as primary residences on mortgage applications, and on Aug. 25, President Trump announced his firing of Cook “for cause.” The Fed governor filed a lawsuit challenging the termination, and the case is expected to land in the Supreme Court. The White House is likely hoping the court will overturn a 1935 decision that largely shields independent Federal agencies from political influence.

If Trump is successful in removing Cook, he would presumably have loyalists in a controlling majority of the Board of Governors, assuming current governors Waller and Bowman fall in that camp given recent rhetoric and policy votes. Of course, there are still four additional votes on the FOMC from the heads of regional Fed banks, so a majority of the Board of Governors doesn’t necessarily mean greater influence over the policy rate. However, they do have control over other initiatives, such as bank regulation, other policy rates (discount rate, IORB), and the approval of reappointments of regional bank presidents.

There is a reasonable debate about beneficial reforms at the world’s most influential central bank, but a perceived loss of political independence could have far greater consequences long term.

Visit ALM First to read more about the latest economic data and overall monthly market trends.

Jason Haley joined ALM First in 2008 and is the firm’s chief investment officer. He heads ALM First’s Investment Management Group (IMG), which is responsible for leading the investment process and investment theme development. Haley also oversees all capital markets activities, including portfolio management, trading, market research and commentary, and execution of hedging and funding strategies for the firm’s depository clients. He holds an MBA with a concentration in finance and a BBA with a concentration in marketing, both from The University of Mississippi.

Not an offer for investment advisory services. This content is provided for general educational information and market commentary purposes only.

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