LOS ANGELES, July 24, 2025 (GLOBE NEWSWIRE) -- Despite a turbulent first half of the year, Payden & Rygel’s economics team remains cautiously optimistic on the U.S. economy. In their newly released Mid-Year Macro Outlook, the firm projects continued growth, moderating inflation, and a Federal Reserve likely to resume interest rate cuts before year-end.

Markets reeled earlier this year following an unexpected round of tariffs in April and rising fears of a recession. But with inflation cooling and job growth holding up, Payden sees room for a softer landing than many headlines suggest.

“Markets overreacted to the April tariff shock, but we believe the data still supports rate cuts and steady growth,” said Jeffrey Cleveland, Chief Economist at Payden & Rygel. “If inflation continues to cool—or unemployment rises modestly—we expect the Fed to act.”

Key Insights for the Second Half of 2025:

• Inflation Can Still Moderate: Core Personal Consumption Expenditures (PCE) inflation has slowed meaningfully. Even with tariff risks, disinflation remains on track.
• No Recession, No Re-acceleration: Payden expects sub-trend GDP growth but sees both recession and re-acceleration risks as overstated.
• Labor Market Easing, Not Collapsing: Downside risks to job growth will outweigh the upside pressure from the shrinking labor force, leading to a gradual rise in the unemployment rate.
• Cuts Are Still on The Table: Payden forecasts up to 75 basis points in cuts by year-end—more than current market pricing.
• Rates Lower Across the Curve: Fiscal concerns are already priced in. With inflation moderating and the Fed cutting, 10-year yields can still decline.
• Dollar Weakness Likely, But the Trade Is Crowded: The greenback may remain soft with the Fed leading rate cuts, though Payden warns the short-dollar trade is crowded.

The report also grades Payden’s original 2025 forecast, issued in December 2024, and offers a measured update considering the year’s volatility.

“Moderating inflation with continued growth is a scenario underpriced in markets and underappreciated among policymakers,” the report concludes.

You can read the report in its entirety here.

ABOUT PAYDEN & RYGEL

With $160 billion under management, Payden & Rygel is one of the largest privately-owned global investment advisers focused on the active management of fixed income and equity portfolios. Payden & Rygel provides a full range of investment strategies and solutions to investors around the globe, including Central Banks, Pension Funds, London, and Milan. Visit www.payden.com for more information about Payden’s investment offerings, including US mutual funds and Irish-domiciled funds (subject to investor eligibility).

This material reflects the firm’s current opinion and is subject to change without notice. Sources for the material contained herein are deemed reliable but cannot be guaranteed. This material is for illustrative purposes only and does not constitute investment advice or an offer to sell or buy any security. Past performance is no guarantee of future results.

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