January 29, 2026
The event was hosted by the CFA Society Chicago – Distinguished Speakers Advisory Group. The format of the event was a fireside chat at the Union League Club of Chicago.
Background of the Speakers
About the Speaker: Jason Cummins joined Brevan Howard in 2004. He develops the firm’s outlook for the economy, politics, and markets, managing the global research team that supports the firm’s massive trading operations. Previously, he served as a Senior Economist at the Federal Reserve Board, leading the macro forecasting team within the Division of Research and Statistics.
About the Moderator: Cosmin Lucaci, as Director of Research with Brownson, Rehmus, and Foxworth, he leads manager selection and monitoring for public managers and plays an important role in crafting the firm’s strategy for alternative investments. Lucaci guided the conversation, with an emphasis on moving past the standard talking points to get to the core of what investors need to know for the year ahead in 2026.
Background and the source of Cummins’ interest in economic research
Lucaci began the conversation by asking about the event or back story that sparked Cummins’ deep interest/dedication to economic research – noting that achieving Cummins’ level of success requires more than just a casual interest.
Cummins shared a little of his back story, highlighting the economic backdrop of 1982 in the United States, but more specifically, in Eugene, Oregon, his hometown. He recalled standing in a line at the Lane County Fairgrounds waiting for government cheese. Both his parents lost their jobs, and his family eventually split apart. Cummins’ father struggled to stay attached to the labor market after that recession. Living through that experience motivated Cummins to learn more about economics and how it functions. Seeing firsthand “what economics can do to families” shaped Cummins interest. He ultimately wanted to understand business cycles and the forces that had affected his own life. That’s why he chose to pursue academia initially.
Integrating Academia, Markets, and Policy
Lucaci noted Cummins’ background and how he had worked in all three segments of finance – having spent time in academia, government (with the Federal Reserve), and as a practitioner in the financial markets. Observing that most professionals spend their careers in a single silo, each with its own distinct language. Lucaci posed the question, how do you integrate these perspectives without falling into what you’ve called “epistemic trespass”?
Cummins shared how he had three careers: as an academic economist, Fed economist, and for the past 21 years, Chief Economist at Brevan Howard. With a little undertone of self-deprecation, Cummins admitted it may have looked intentional, but he suggested to the audience it was a series of mistakes that turned out well.
Cummins went on to share that each silo tends to misunderstand the others:
· Academics often don’t understand markets. One example: an academic team once lost a large sum of money and insisted “the markets were wrong and we were right.” – but unfortunately for them that’s not how markets work.
· Markets often misunderstand policymakers. Think back to the GFC—markets didn’t grasp what Bernanke was willing to do.
· Policymakers often misunderstand markets. In 2019, the Fed insisted Quantitative Tightening was fine—until the repo market experienced severe disruption.
Cummins believes there’s a “delta” between these misunderstandings, which creates risk premia. If one understands all three domains, they are able to act faster.
As an example, in the early part of COVID, when a case appeared near Travis Air Force Base, Cummins recognized it spread quickly to the neighboring community and viewed it was only a matter of time before the virus was everywhere. Cummins was able to put on some larger trades before the market caught up. “Sometimes it’s just knowing things a couple weeks in advance” that gives a trader an edge.
The Fed, Politics, and the Next Chair
Lucaci shifted the conversation to discuss the Fed, noting this upcoming Federal Reserve Chair transition feels different. He inquired, beyond who will be the next Fed Chair, does the environment itself change? Does political pressure shrink the talent pool?
Cummins shared his view that the Federal Reserve has always been political. Independence is not absolute; it’s a balance between independence and accountability.
Cummins cited some historical context about the institution of the Federal Reserve Bank noting:
· We had no central bank for 75 years because it was too politically controversial
· Operational independence only dates to 1951
· Chairs have always navigated politics—Burns under Nixon, Greenspan under Cheney, even Volcker had moments of political hesitation.
Cummins went on to share what’s different today is not the existence of politics, but the style of politics. And as for the search process: it began with 11 names, but the pool shrank quickly. Treasury Secretary Scott Bessent said he wanted someone with an “open mind”—which, translated, means someone committed to lower rates. Add political scrutiny and the risk of being publicly criticized by the President, and many qualified people simply won’t want the job.
Rate Outlook for 2026 and Beyond
Lucaci then pivoted to the prior day’s Fed decision and inquired about Cummins best guess for the trajectory of rates.
To address the question, Cummins took a moment to define and separate “policy rates” from “long-term rates.”
For Policy rates he explained monetary policy is “modestly restrictive.” The labor market looks stable on the surface but is weakening underneath. Inflation is elevated, but mostly because of tariffs, which are a one-time price level adjustment, not ongoing inflation pressure.
If we get a soft landing, we probably need 50–100 bps of cuts. If the labor market weakens more than expected, we may need something more like 2% policy rates, which no one is talking about yet.
On long-term rates, Cummins offered his view that the fundamentals point to higher yields – productivity gains, elevated inflation, fiscal stress all contributing to higher rates. But the Treasury has enormous tools to suppress long-end yields.
The most important macro event last year, in Cummins view, was the Treasury’s extraordinary intervention in Argentina using the Exchange Stabilization Fund. That had never been used in that way before. More recently, the Treasury directed the Fed to conduct a rate check on USD/JPY, signaling a willingness to sell dollars—breaking with 30 years of “strong dollar” policy.
If long-end yields rise too far, Treasury can shift issuance away from 7s, 10s, 20s, and 30s and into bills—effectively a form of stealth Quantitative Easing.
Data Integrity
Lucaci then shifted the conversation to the topic of Data Integrity. Posing the question, you (Cummins) once led statistics and research at the Fed – with missing data from the shutdown and concerns about inflation measurement, are we flying blind?
Cummins enlisted Hanlon’s Razor to share his view on the topic of data integrity – that being: “Never ascribe to malice what can be explained by incompetence.” Cummins expanded the thought by sharing the BLS made some poor methodological choices under pressure, but that he doesn’t believe there was intentional manipulation. The bigger issue in his opinion is that the US measurement system is outdated. The US needs a Boskin Commission 2.0 to rethink inflation measurement in an era of rapid technological change. Cummins suspects we (the US) are overstating inflation, just as we did in the 1990s.
Cummins continued by sharing he views tariffs are being misclassified. They are public finance, not macroeconomics. They’re essentially a consumption tax. No one argues for tighter monetary policy because a state raises its sales tax.
Tariffs, Inflation, and Misclassification
Lucaci continued the discussion by pursuing a few more thoughts from Cummins on his view that tariffs have been misunderstood as a macroeconomic inflation shock rather than what they really are—a tax. Lucaci asked Cummins to expand on that.
Cummins commented how economists made a categorical error. Tariffs are fundamentally a consumption tax, not a macroeconomic inflation engine. They raise the price level once, but they don’t create ongoing inflationary pressure.
Cummins reiterated, “Tariffs are one-time, price-level adjustments… they should have been filed under public finance, not macroeconomics.” He added to the point how no one argues for tighter monetary policy when a state raises its sales tax. Yet that’s essentially what happened, people panicked and treated tariffs as if they were a persistent inflation shock. The pandemic then layered on its own inflation dynamics, which understandably confused the picture, but the underlying point remains: we misdiagnosed the source of the price increases.
AI vs. Tariffs — What Actually Matters?
Lucaci then turned the topic of conversation over to technology. Posing the question, how do you think about AI in the macro landscape?
Cummins shared his view that AI is far more important than tariffs—by orders of magnitude. Tariffs are a rounding error compared to what AI could do to productivity, growth, and the structure of the economy.
Cummins views AI as the most important invention in the history of humankind. In doing so, he referenced a point from Chad Jones at Stanford, one of the world’s thought leaders on the subject, in which Jones economic research suggests that AI surpasses even electricity, computers, or the internet in significance. Meanwhile, we’re sitting around debating a one‑percent consumption tax (via tariffs) … it’s a thought that Cummins simply couldn’t reconcile in his mind, calling the situation “bananas.”
Investors vs. Traders — How Should People Think About Risk?
Next, Lucaci posed a question in the context of an investment allocator – through Cummins’ lens of Brevan Howard, how does he (Cummins) think about the difference between investors and traders? And how can one take advantage of both trading volatility and short-term dislocations while fundamentally adhering to a long-term investing approach without confusing market signals?
Cummins responded by first defining the terms, investors and traders, and how they live in different universes.
- Investors are short volatility.
They care about long‑term compounding, stable returns, and avoiding drawdowns.
- Traders are long volatility.
They look to monetize the risk premia all along the path between point A and point B, not just the endpoints.
Cummins continued, at Brevan Howard, we thrive in environments where the path is messy—where macro uncertainty creates opportunities.
Cummins also spoke about a commonly held view (misconception) about the hedge fund space and how active management isn’t worth the higher expense. He went onto to reference a metaphor about branding to help drive home his point. In some instances, when building a portfolio, it’s fine to have a core allocation to a lower end, low-cost strategy/vehicle, similar to what Amazon Prime staples are from a branding/market perspective. Associating a low-cost investment with a broad based, index fund, referring to that as your Amazon Prime batteries. He continued the metaphor by mentioning the other end of the spectrum with luxury brands, and how for certain items/investments the luxury brand can be worth the added costs. He shared some background about how well Brevan Howard has managed their flagship strategy, managing to provide investors with over $32Billion in returned capital, while doing it with less volatility than the broader equity market, referencing the S&P 500. For hedge funds, particularly for those that have demonstrated an ability to harvest that risk premia along the path of volatility, paying the added costs can make sense in Cummins opinion.
Portfolio Construction — Is there a universal rule of thumb to follow?
Lucaci inquired if there was a universal principle to portfolio construction that applies to everyone.
Cummins answered the question with a simple, “no.” He expanded on that to share portfolio construction is entirely dependent on the institution’s needs. For example, take university endowments. Some schools like Swarthmore or the University of Chicago, depend heavily on their endowment to fund operations. They can’t take the same risks as, say, a sovereign wealth fund with no near‑term liabilities.
Cummins mentioned one cannot answer that question until you understand the needs of the institution. Liquidity, liability matching, spending rules—these matter more than theoretical optimality.
If You Wrote a Book, What Would It Be About?
Lucaci inquired how Cummins has hinted at writing a book someday. If he were to write a book today, what would it cover?
Cummins joked that he already has a book waiting to be written in his head.
The book he’s conceived has two parts:
- Micro: Hedge fund culture.
Cummins spoke about the quirks and rituals of the industry. He spoke about any hedge fund, in their office there’s a giant fruit bowl next to the charismatic founder. His book would focus on the orbit of people around the fruit bowl and the roles they play to highlight the fascinating characters and the proximity to the fruit bowl.
- Macro: The Exchange Stabilization Fund.
I want to write the definitive history of the Exchange Stabilization Fund – America’s emergency financial “slush fund.”
It’s been used in extraordinary ways, including the recent Argentina intervention.
Audience Q&A
Q: Why did the yield curve take so long to normalize?
Cummins: Markets are inefficient at macro. Risk premia can persist for years. The term premium should be higher, but markets often need a catalyst to reprice.
As I said, “Markets are terrible at macro.”
Q: How will the midterms affect markets?
Cummins: Nearly everything the administration is doing right now is aimed at the midterms. If Democrats win the House, policy effectively freezes because of expected legal and political conflict.
“To a first approximation, everything can be seen through the midterms.”
Q: What happens if Treasury shifts issuance to the short end?
Cummins: Long‑end yields could collapse. But the unintended consequence is that investors may flee duration risk entirely.
“There is no cosmological constant… we can move that number… and take $300 billion out of the long end.”
This article was prepared by Joseph Waldvogel, based on a transcript summarized with the assistance of CoPilot. All content was revised, edited and reviewed for accuracy and clarity by the author.