Will interest rates go up or down?

🔑 Summary: Markets are calm for now, but credit concerns and stagflation risks could send rates higher fast.

We got a small win last week: inflation came in a bit lower than expected. But before you pop the champagne, here’s the catch—rates didn’t move. That’s because markets expect the full impact of the new tariffs hasn’t hit yet.

Then, just 10 minutes before markets closed Friday, Moody’s downgraded the U.S. credit outlook—a first in history. It flew under the radar, but don’t be surprised if it rattles markets and pushes rates higher this week as investors shift away from the U.S. Treasuries.

Meanwhile, Powell’s message stayed firm: the Fed is preparing for rising inflation and unemployment—aka stagflation. That typically keeps rate cuts off the table, even if growth slows.

This week brings a string of Fed speeches, but the tone likely won’t change. Instead, watch for headlines on tariffs to drive market movement.