Confirms divisions exist, evident from December dot plot showing dispersion between officials projecting more cuts vs. hawkish ones projecting none or higher rates.

Schwab's case: Fed on hold now, expecting 1-2 rate cuts next year. Fed has time to be patient given economic outlook and need for more evidence on labor market cooling or inflation moving lower.

Key focus will be labor market and inflation, but need 2-3 more months of data for a complete picture due to government reopening and seasonal noise.

2025 was a very good year for bonds with positive returns across all tracked indexes. High-quality investments returned 6-8%.

Expects positive bond returns again in 2026 but lower magnitude due to: 1) lower starting yields = smaller income returns, 2) less price appreciation as Fed expected to cut only 1-2 more times.

Significant additional price appreciation would require more Fed cuts than expected, likely due to negative economic reasons (slower growth/recession), which would cause risk assets to sell off.