Elaia Weekly View
🌿 Elaia Weekly View – Week 51 / 2025
The job market is in trouble… but the Fed will save 2026
The US economy is showing clear signs of deceleration, with the labor market emerging as the main point of weakness. At the same time, the government shutdown has created a significant data vacuum, leaving the Federal Reserve with limited visibility on both inflation and employment. Jerome Powell himself acknowledged that policymakers are effectively “flying blind”.
Behind this statistical uncertainty, one message is becoming increasingly clear: the US job market is deteriorating more rapidly than official data suggest. This weakness increases the risk of a market correction in Q1, which could ultimately force the Fed to ease monetary policy more aggressively than currently priced by markets.
In this article, we explain why short-term risks remain elevated, but also why a more accommodative Fed, renewed liquidity support and rate cuts could help stabilize markets in 2026. Rather than signaling the start of a long-term bear market, this environment is likely to favor sector, style and regional rotations, creating selective investment opportunities.