Many in finance have been publicly arguing that the Federal Reserve would soon cut its benchmark federal funds rate, leading to cheaper financing and increased stability everywhere, including commercial real estate. But sometimes markets get things wrong, and some voices are saying that this is one of those times.

One indicator of market expectations is the falling yields of longer-term Treasurys. As of Wednesday, December 6, the 10-year was at 4.12%, seemingly moving downward to the sub-4% levels seen earlier in 2023. The 30-year was at 4.22% in an ongoing move downward from its recent mid-October high of 5.11%. All would suggest that investors were betting on lower future interest rates.

Experts have recently been predicting that the Fed would be forced to back off its higher rates, even though officials at the central bank have continued to say they were in no rush, waiting to see how data developed. Deutsche Bank economists expect a 175-basis point retreat. Wall Street has geared up for cuts. Pershing Square Capital Management CEO Bill Ackman thinks the Fed might start cutting rates as early the first quarter of next year.