PGIM’s Peters Comments on Fed Leadership, Rate Cuts Impact Treasury Markets

On December 4, 2025, PGIM Co-CIO for Public and Private Fixed Income Greg Peters spoke to Bloomberg TV about Fed independence, arguing that potential Fed Chair frontrunner Hassett would face constraints delivering rapid rate cuts due to the Fed’s committee-based decision-making structure [1]. This came against a backdrop of strong market expectations: the CME FedWatch Tool showed an 89.2% probability of a Fed rate cut at the December 10th meeting [2], while BofA had previously forecast a December cut and two additional cuts in 2026 [3]. The interview appeared to temper expectations of aggressive policy easing, contributing to a 0.34% decline in TLT (long-term Treasury ETF) on the same day [0]. TLT’s movement reflects the sensitivity of long-duration bonds to rate cut expectations—less aggressive easing would keep yields higher, pressuring bond prices.

1. Fed leadership transitions introduce significant uncertainty into rate policy expectations, even when market probabilities for near-term cuts are high. Peters’ comments highlighted the often-underestimated role of committee dynamics in shaping Fed decisions, contrasting with assumptions of unilateral action by a new Fed Chair.
2. Small adjustments to market sentiment, such as high-profile comments from fixed income experts, can trigger immediate price movements in Treasury markets. The 0.34% drop in TLT demonstrates that even incremental shifts in rate cut expectations impact long-duration assets.
3. The divergence between market pricing (89% chance of December cut) and Peters’ caution underscores the risk of market disappointment if policy easing is less aggressive than currently priced.

• Market disappointment if the Fed delivers fewer or smaller rate cuts than expected, particularly if Hassett assumes the Fed Chair role and faces committee constraints. This could lead to further volatility in TLT and other long-duration fixed income assets.
• Uncertainty around Fed leadership transition may persist until the appointment is confirmed, keeping Treasury markets sensitive to related comments and developments.

• Fixed income investors may find attractive entry points if TLT adjusts further as market expectations align with the Fed’s committee-based policy process.
• Increased clarity on Fed leadership and policy path could reduce volatility, creating more stable conditions for bond markets.

PGIM’s Greg Peters commented on Fed independence, highlighting that potential Fed Chair Hassett would face limitations in delivering rapid rate cuts due to the Fed’s committee structure. TLT (long-term Treasury ETF) fell 0.34% on December 4, 2025, amid an 89.2% CME FedWatch probability of a December rate cut and BofA’s prior forecast of December and 2026 cuts. The market reaction underscores the sensitivity of Treasury prices to comments about Fed leadership and policy constraints, emphasizing the importance of committee dynamics in shaping monetary policy outcomes.