The Federal Reserve is edging toward a path that could leave it easing policy while many of its peers are either on hold or turning more restrictive. That divergence is at the heart of Nomura’s latest calls, which argue that the United States is heading for further rate cuts in 2026 even as Asia and parts of the developed world effectively slam the brakes on monetary stimulus. For investors, the prospect of a cutting Fed in a tightening world is not just a macro curiosity, it is a live question about where capital, currencies and risk appetite go next.
Nomura’s strategists frame the story as a clash between a U.S. cycle shaped by sticky but manageable inflation and a global backdrop where earlier easing has largely run its course. Their view is that the Federal Reserve can keep trimming borrowing costs under a new chair while central banks from Seoul to Sydney and Kuala Lumpur shift toward a more hawkish stance. That split, if it persists, could redraw the map for the dollar, Asian bonds and everything from copper miners to aluminum smelters.
The Nomura call: a cutting Fed in a tightening world
At the center of the debate is a simple but striking proposition: the Federal Reserve may still be easing just as other central banks are tightening. Dominic Bunning, who is Head of G10 FX Strategy at Nomura, has told investors that the greenback could face pressure if the Fed keeps cutting while other central banks turn more hawkish. In his view, markets are no longer fixated on the U.S. domestic macro picture alone, they are weighing more structural issues such as how a looser Fed interacts with tighter policy abroad.
Nomura’s rate strategists have already sketched out what that easing path might look like. They have argued that the Fed is likely to deliver two 25 basis point cuts in 2026, with moves penciled in for June and September under a new Fed (Federal Reserve) chair. That forecast builds on an earlier call, highlighted when Nomura joined other top brokerages in expecting a rate cut at a key policy meeting, where it stressed that “the December decision remains a close call” and flagged the risk of “four hawkis” moves before the easing cycle took hold, according to Yet, Nomura. That combination of near term caution and medium term easing is what sets up the divergence story.
Inside Nomura’s U.S. outlook: growth, inflation and immigration
Nomura’s U.S. macro team frames the domestic backdrop as one of solid activity colliding with stubborn price pressures. In its Outlook for 2026, titled “Balancing Accelerating Growth and Sticky Inflation,” the bank argues that easing headwinds and policy stimulus are likely to drive an acceleration in U.S. growth. That stronger backdrop, in its view, coexists with inflation that is proving sticky enough to keep the Fed cautious but not so entrenched that it must slam on the brakes again.
A key plank of that analysis is the role of immigration in the inflation story. Nomura’s economists write that There is little evidence that the post pandemic surge in immigration pushed up rent inflation, and they argue that, consequently, a slowdown in that flow is unlikely to deliver the kind of disinflation some policymakers might hope for. Consequently, they see inflation staying somewhat sticky, but not at levels consistent with a hawkish Fed policy for long, which helps justify a gradual cutting cycle rather than a renewed tightening push.
Asia’s policy split: where easing is already over
While the Fed debates how far and how fast to cut, Nomura argues that much of Asia has already moved through its easing phase. In a detailed regional assessment, the bank notes that In South Korea, New Zealand, Australia and Malaysia Nomura says the easing cycle is seen as over, reflecting stronger growth momentum and a shift toward more neutral or even restrictive stances. That assessment underscores how far ahead many Asia Pacific central banks are in the cycle compared with Washington.
The same report stresses that Nomura sees Asia’s easing cycle as largely complete despite low inflation in some economies, suggesting that Asian rate differentials with the Fed could widen if the Federal Reserve keeps cutting. In a separate summary, the bank notes that Asia is likely to experience a policy split, with some central banks staying on hold while others edge toward tightening, a backdrop that could have significant implications for FX and regional bond markets if U.S. policy moves in the opposite direction.
How markets are already trading the divergence
Financial markets have not waited for the Fed to move again before pricing in this divergence. On the macro front, expectations for a U.S. rate cut have strengthened, with one metals briefing noting that On the macro front, expectations for a US Fed interest rate cut have strengthened and positive signals have been released, helping aluminum costs fluctuate at highs and supporting a slight rebound in the non ferrous metals market. That kind of sector specific reaction shows how sensitive commodity prices are to even incremental shifts in Fed expectations.
Equity and bond markets are also reflecting the policy gap. In Australia, one market wrap described how local bond yields were rising even as markets firmed up expectations for the U.S. Federal Reserve to cut, a stark contrast with major global policy trends that created a unique dynamic for domestic assets. That divergence in yields and expectations is exactly the kind of environment in which currency and cross border capital flows can become more volatile.
What Bunning sees for the dollar and global FX
For currency markets, the key question is how a relatively dovish Fed interacts with a more hawkish rest of the world. Dominic Bunning has argued that investors are not just looking at the U.S. domestic macro picture, they are focusing on more structural issues that shape the greenback’s role. In his interview as Head of G10 FX Strategy at Nomura, he suggested that the dollar could weaken if the Fed keeps cutting while other central banks turn more hawkish, because rate differentials would move against the U.S.
Bunning’s comments, delivered on CNBC, highlight how much weight FX markets place on the relative stance of central banks rather than their absolute levels. He framed the risk as one where the greenback loses some of its yield advantage just as Asia and other regions move away from emergency level support, a combination that could encourage investors to rotate into higher yielding currencies. Another clip of the same discussion, captured in a separate link, underlines that Dominic Bunning sees investors weighing those structural shifts carefully as they position for 2026.
Consensus, skepticism and the “pause” camp
Nomura is not alone in expecting the Fed to ease, but there is a growing camp that thinks 2026 could be a year of relative stasis for global policy rates. One cross asset strategist wrote that, Viewing the cross section of central bank expectations, policy rates are expected to move very little next year, with carry rather than capital gains likely to be the main driver of total return. That “pressing pause” narrative stands in contrast to Nomura’s view of a Fed that is still trimming at the margin while Asia edges toward tighter settings.
Even among those who see cuts coming, there is debate about timing and magnitude. A summary of brokerage calls noted that Global brokerages, including J.P. Morgan and Morgan Stanley, have recently reversed their calls ahead of a key policy meeting, with some shifting from expecting hikes to penciling in cuts. They now see the Fed moving in a more dovish direction, but the exact path remains contested, which is why Nomura’s specific forecast of two 25 basis point cuts in 2026 under a new Fed chair stands out as relatively bold.
What it means for investors: bonds, credit and risk assets
For bond investors, a Fed that keeps cutting while Asia tightens or holds steady creates a complex landscape. One analysis of central bank expectations argued that Viewing the likely path of policy, carry is set to dominate returns, which means that relative yield differentials between the U.S. and Asia could matter more than big directional moves in global rates. If Nomura is right and the Fed trims while Asian central banks stay put or tighten, U.S. Treasurys could outperform on price while Asian bonds rely more on income.
Credit and equities will also feel the impact. When Nomura first joined other houses in predicting a near term Fed cut, a separate report noted that Morgan and Morgan were among the firms that had reversed their calls, a shift that helped fuel rallies in rate sensitive sectors. At the same time, Nomura’s Asia team has warned that Nomura’s outlook suggests Asian rate differentials with the Fed could become a key driver of FX and regional bond markets, which means investors will need to think carefully about how they balance U.S. duration exposure with positions in South Korea, New Zealand, Australia and Malaysia.
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*This article was researched with the help of AI, with human editors creating the final content.
Grant Mercer covers market dynamics, business trends, and the economic forces driving growth across industries. His analysis connects macro movements with real-world implications for investors, entrepreneurs, and professionals. Through his work at The Daily Overview, Grant helps readers understand how markets function and where opportunities may emerge.
