Analysis of Bryn Mawr Trust's Andrew Davis on Market Reaction to Upcoming Fed Decision

This report is based on Andrew Davis, SVP & Head of Macroeconomic Research at Bryn Mawr Trust, appearing on CNBC’s ‘Fast Money’ on December 5, 2025 [1], where he stated the market will likely embrace the upcoming Federal Reserve decision (scheduled for Dec 9-10). Current market context shows a ~87-95% probability of a 25bps rate cut, per the CME FedWatch Tool as referenced in external reports [2][4]. On the day of Davis’ comments (Dec 5), major indices saw modest gains: S&P 500 (+0.06%), NASDAQ (+0.04%), Dow (+0.16%) [0], with rate-sensitive sectors like Real Estate outperforming (+1.39%) and defensive Utilities underperforming (-2.05%) [0]—aligning with rate cut expectations. External sources also note Morgan Stanley reversed its earlier rate cut call from January to December 2025 [3][4], reflecting shifting consensus.

1. Davis’ comments reinforce pre-existing market sentiment that a December rate cut is likely and will be well-received by investors. The modest Dec 5 gains and sector rotation (from defensive to rate-sensitive) suggest investors are already positioning in anticipation.
2. The Real Estate sector’s outperformance on Dec 5 highlights immediate market sensitivity to rate cut expectations, a trend that could continue if the Fed delivers on consensus expectations.
3. Morgan Stanley’s revised call (returning to a December rate cut expectation) [4] aligns with Davis’ outlook, indicating growing institutional consensus around near-term rate cuts.

• Opportunities
  : Rate-sensitive sectors (Real Estate, Communication Services, Consumer Cyclical) could continue to benefit from a dovish Fed decision, as investors rotate from defensive assets to riskier, growth-oriented ones.
• Risks
  :
  • Internal Fed splits: 5 voting members are opposed or skeptical of a rate cut [2], which could lead to hawkish language or no cut at all—potentially triggering negative market reactions.
  • Inflation data (upcoming PCE report) could influence the Fed’s decision, adding uncertainty.
  • Market disappointment if the Fed does not meet consensus expectations for a December rate cut.

• Davis forecasts a positive market reaction to the Dec 9-10 Fed decision.
• Dec 5 market performance shows modest gains with rate-sensitive Real Estate outperforming defensive Utilities.
• CME FedWatch Tool indicates ~87-95% probability of a 25bps rate cut.
• Morgan Stanley has revised its rate cut forecast back to December 2025.
• Uncertainties include Fed internal splits, upcoming inflation data, and potential market disappointment if expectations are unmet.