ALL INPredictions
Last updated Nov 29, 2025
Episodes / E114: Markets update: whipsaw macro picture, big tech, startup mass extinction event, VC reckoning
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Sacks @ 00:15:54Wrong
economymarkets
As implied by the yield curve in early Feb 2023: (1) the Fed funds rate will peak within ~6 months at about 4.75–5.0% with at most one additional 25 bp hike; (2) over the subsequent two years, the Fed will cut rates by roughly 50 bps; and (3) over the long term, U.S. interest rates will stabilize around 3.5%, with no return to a near‑zero interest rate policy like in the 2010s.
So basically the market is predicting we get maybe one more quarter point roughly not much. And then if you go to the two year it's at 4.09...what the market is actually predicting is that over the next two years, we're actually going to get a 50 basis point decrease from the fed. And then if you go to say the five year or the ten year, we're at 3.5%. So the market's basically saying that long term rates are going to stabilize at 3.5%. We're not going back to the abnormal zero interest rate policy...View on YouTube
Explanation

Evaluating the three parts of the prediction against what actually happened:

  1. Peak level and number of hikes. At the time of the podcast (early Feb 2023), the federal funds target range was 4.50–4.75%. (ycharts.com) Sacks said the curve implied “maybe one more” 25 bp hike and a peak around 4.75–5.0%. In reality, the Fed hiked three more times: to 4.75–5.00% in March 2023, 5.00–5.25% in May, and 5.25–5.50% in July, where it peaked. (ycharts.com) That is three additional 25 bp hikes and a peak 50 bps higher than his implied 4.75–5.0%, so this component is clearly wrong.

  2. Net cuts over the following two years. He said the curve was implying about a 50 bp reduction in rates over the subsequent two years. The Fed held the peak range of 5.25–5.50% from July 2023 through mid‑2024, then began cutting in September 2024 (to 4.75–5.00%), November 2024 (4.50–4.75%), and December 2024 (4.25–4.50%). (cnbc.com) By early 2025, the target range was still 4.25–4.50%. (ycharts.com) Relative to the February 2023 level of 4.50–4.75%, that’s only about 25 bps lower after two years, not the ~50 bps Sacks described, and it required a much higher‑than‑expected peak and late‑starting, larger cuts. So the trajectory and net change both differ materially from his implied path.

  3. Long‑term rates around 3.5% and no return to ZIRP. Long‑maturity Treasury yields in late 2025 are closer to 4% than 3.5%: the 10‑year Treasury yield is around 4.0–4.1%, with the 5‑year near 3.7%. (mintrates.com) That doesn’t match “stabilizing” at 3.5% so far, though it’s also not wildly off. His claim that we’re “not going back” to near‑zero policy rates is not yet testable as a long‑run statement, but to date has not been falsified: the Fed funds rate has stayed in the 3.75–5.50% range since 2023, far from 0%. (ycharts.com)

Because the central, time‑bounded elements of the prediction—how high and how quickly rates would peak, and the scale of cuts over the next two years—were significantly off relative to actual Fed policy, the overall prediction is best classified as wrong, even though the very long‑run “no ZIRP” idea remains inconclusive.