Any indication that the Fed is “hedging its bets” or remains concerned about inflation could introduce volatility across asset classes.
Markets have already priced in a 25 basis point rate cut after the latest inflation data showed softer-than-expected price rise overall, setting the stage for the second consecutive cut in the Fed funds rate for the year.According to the CME FedWatch Tool, markets are almost unanimous in their expectations, with 99.9% betting on a Fed cut to a range of 375–400 basis points at its meeting on October 29, 2025. Only 0.1% of investors expect no change, keeping rates at the current 400–425 basis point range.
In the hypothetical scenario of a surprise pause, Franklin believes the market’s reaction would depend on the rationale behind it. A pause due to insufficient data would be looked through, but one based on a fundamental reassessment of inflation risks would have a more “persistent impact on market sentiment.”
On the topic of precious metals, Franklin views the recent pullback in gold and silver as a healthy consolidation. He said the metals had become “technically overstretched” and the price action represents a “cooling off and a return back towards trend lines.” He affirmed that the long-term strategic drivers for gold remain intact, citing an uncertain geopolitical outlook, easy fiscal and monetary policies, a lack of fiscal discipline from major governments, and a trend of central banks diversifying reserves away from the US dollar.
Also Read: Two more Fed rate cuts likely as US economy slows, says ING’s Knightley
Regarding global equities, Franklin acknowledged that markets have performed strongly, showing signs of an “early stage of a bit of a melt-up.” In this environment, his firm is participating in the rally but is becoming more selective with capital deployment.
Within Asia, he expressed a positive view on Singaporean equities, supported by the Monetary Authority of Singapore’s (MAS) programme to deepen local markets. On India, Franklin’s firm maintains a neutral stance. He stated that India has seen “some stabilisation and some recent relative performance momentum.” He values the Indian market as a “diversifier away from the more cyclical markets such as northern Asian markets,” like Korea, which he believes looks stretched in the short term and may be at risk of profit-taking.
Also Read: Fed may stick to a smaller rate cut despite weak data, says Raymond James strategist
For the entire interview, watch the accompanying video
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