Goldman Sachs' Jonny Fine Predicts Fed Rate Cut; Markets Show Mixed Positive Reaction

On December 9, 2025, Jonny Fine, Goldman Sachs’ global head of investment grade credit, appeared on CNBC’s “Squawk on the Street” and predicted the U.S. Federal Reserve would cut interest rates the following day [1].
That day, U.S. stock indices delivered mixed but positive results: S&P 500 (+0.32%), NASDAQ Composite (+0.41%), Dow Jones Industrial Average (+0.25%), and Russell 2000 (+0.86%) [0]. The Russell 2000’s outperformance reflects investor optimism for rate-sensitive small-cap companies, which rely more on borrowing, while the NASDAQ’s strength signals positive sentiment toward growth stocks (historically negatively impacted by high interest rates) [0].
Treasury yields remained relatively flat, with the 10-year yield at 4.178% and 2-year yield at 4.781% [2]. The yield curve remained inverted (2-year yield > 10-year yield), a traditional indicator of expected future rate cuts [2]. The 10-year yield was slightly down from a multimonth high of ~4.2% reached on December 8, 2025, reflecting pre-Fed meeting positioning [4].
Eastspring Investments noted a December rate cut would support equity markets and credit quality [2], while CNBC reported traders anticipate a “hawkish cut”—a 25-basis-point reduction paired with guidance that the Fed may pause further easing [3]. Fine’s role in credit markets means his comments likely influence investor sentiment toward investment-grade corporate bonds, which have an inverse relationship with interest rates [2].

1. Credit Market Significance
   : Fine’s position as head of investment grade credit at Goldman Sachs lends credibility to his outlook, potentially driving increased demand for investment-grade bonds if the rate cut is confirmed [2].
2. Small-Cap and Growth Stock Optimism
   : The Russell 2000’s outperformance and NASDAQ’s strength indicate investors expect rate cuts to disproportionately benefit rate-sensitive sectors, which could drive short-term volatility depending on Fed guidance [0].
3. Guidance Sensitivity
   : The “hawkish cut” expectation highlights that market reactions will depend less on the immediate rate action and more on the Fed’s dotplot (rate path projections) and Chair Jerome Powell’s press conference comments [3].

• Fed Guidance Risk
  : If the Fed’s guidance is more hawkish than expected (signaling fewer 2026 rate cuts), stocks and bonds could experience a sell-off [3].
• Inflation Risk
  : Persistent inflation above the Fed’s 2% target may slow or pause rate cuts, negatively impacting markets [3].
• Economic Growth Risk
  : A weaker-than-expected economic outlook could lead to more aggressive rate cuts but raise concerns about a potential recession [3].

• Investment-Grade Bonds
  : A rate cut could increase demand for these bonds as their yields become more attractive relative to Treasuries [2].
• Rate-Sensitive Stocks
  : Small-cap and growth stocks may continue to outperform if the rate cut is confirmed [0].

• Jonny Fine (Goldman Sachs) predicted a Fed rate cut on December 10, 2025, in a CNBC interview [1].
• U.S. stocks showed mixed positive gains on December 9, 2025, with the Russell 2000 leading at 0.86% [0].
• Treasury yields were flat, with an inverted curve, reflecting pre-existing rate cut expectations [2].
• Traders anticipate a “hawkish cut” (25-basis-point reduction, cautious guidance) [3].
• Fine’s credit market expertise adds weight to his comments, with potential benefits for investment-grade bonds [2].
• Decision-makers should monitor the Fed’s dotplot, Powell’s press conference, and upcoming economic data (JOLTS, nonfarm payrolls) [3].