The Federal Reserve kicked off its interest rate easing cycle as it eyes a soft landing for the US economy. State Street Global Advisors chief investment strategist Michael Arone believes a soft landing is possible, and joins Morning Brief to lay out his case.

"It's clear that both Chairman Powell and broader Fed officials have high conviction that the soft landing is here. He described it in the post-meeting press conference that the economy is in good shape, the labor market, by historic standards, still looks pretty good, and although he was reluctant to declare mission accomplished on inflation, that he's gained confidence that it's headed in the right trajectory," Arone tells Yahoo Finance.

He notes that the market is also showing confidence in a soft landing, which is currently reflected in asset prices, valuations, credit spreads, and volatility measures. Meanwhile, the latest jobless claims data has ticked down. "So the soft landing remains intact. The Fed believes it, the market believes it, and the data supports it," Arone explains.

As the Fed weighs its November cut, Arone says that he would be "surprised" if it followed through with another 50 basis points. He believes that the first cut signaled that monetary policy was "too restrictive" and the Fed was willing to "take some risks early on to get closer to where they want to end up, which is probably around 3%."

He argues that such an aggressive move sent mixed signals to investors about the economy, and with the 2024 election right around the corner, the 50-basis-point cut also sparked some concerns about the Fed's political independence. However, Arone highlights that the November meeting will occur after the election, "so they'll be able to avoid some of the questions around their political independence if they are able to do this post-election."

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This post was written by Melanie Riehl