Cathie Wood Dismisses Fed Rate Hike Fears in Bullish Note

Cathie Wood has weighed in on the latest U.S. jobs data, arguing that fears of a Federal Reserve rate hike are overblown and that investors are reading the numbers wrong. She also suggested inflation pressure could ease if tensions with Iran cool off.

Cathie Wood took to social media to calm investor nerves about the Federal Reserve raising interest rates, following a stronger-than-expected U.S. jobs report.

According to the ARK Invest founder, the latest labor market data is being misinterpreted as an inflation warning when it's actually something else entirely. She pointed to bond markets as offering a more honest read on the economy. On X, Wood noted that nonfarm payrolls added 172,000 jobs versus a consensus forecast of 88,000, while previous months were revised upward by 93,000 positions. Wages, meanwhile, grew around 0.3%. "Yet the market sold off," Wood wrote. Investors are betting that "stronger than expected employment and growth will cause an acceleration in inflation." The narrative, as she put it: dollar in a death spiral, inflation coming back, the jobs boom is a trap. Wood sees the opposite.

Wood pushed back on the overheating economy thesis by pointing to productivity trends. Productivity growth of roughly 3% and unit labor costs of around 0.5% suggest "healthy, productivity-driven growth" rather than an overheating economy, she wrote.

She also flagged the Treasury market, noting that Treasury rates are flattening further despite a dramatic oil price surge over the past year. Past cycles of similar energy shocks saw a steeper yield curve followed by faster rises in inflation expectations, she said. Instead, Wood thinks markets are starting to grasp that rapid technological development, particularly AI, can have deflationary consequences. AI adoption is already beginning to lift productivity across multiple sectors, and she believes it may help drag inflation down over time. Inflation could even "move into negative territory before year-end" if geopolitical tensions with Iran ease and oil prices drop, Wood said.

The Fed rate concerns follow a recent note from BNP Paribas, which projected three rate hikes beginning December 2025.

Wood also went after the Fed's "historic policy error" of aggressively raising rates in 2022. At the time, she sa