A return to 2-3% Fed Funds could mean a harsh downturn, Michael Kao warns

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14.10.2026

A return to 2-3% Fed Funds could mean a harsh downturn, Michael Kao warns — Route to lower Fed Funds may involve bust

Michael Kao, CIO at Akadia Capital, cautioned that while many are focused on the recent backup in yields, the most probable route back to a 2-3% Federal Funds rate would be through a significant economic and market bust.

Kao shared this view in a post dated 10/14/26.

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Kao previously noted signs of a capitulation bottom in TLT and disclosed buying short-term call options as the fund showed signs of overselling, according to an earlier update here. He also observed the breakdown of the TLT double-bottom pattern in the midst of heightened market volatility earlier in October here. These developments frame his latest caution on the path of Federal Funds rates.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.

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