The Globe and Mail reports in its Saturday edition that the Federal Reserve now assumes that U.S. economic growth and employment will remain relatively strong next year, allowing it to maintain interest rates above 5 per cent even as inflation subsides. The Globe's David Berman writes that it is an unusual conclusion to a sustained period of aggressive rate increase by the bank over the past 18 months. A hard landing characterized by recession and rate cuts are more in line with history. "If the Fed is right about the economic outlook, then rates can unquestionably stay higher for longer. We just don't believe those forecasts," Paul Ashworth at Capital Economics said in a note. Many experts believe the economy is nearing a point at which it decelerates from its current pace of steady expansion and heads toward a recession in the coming year -- pushing down bond yields, and that defensive stocks will perform better as the realization sets in that U.S. economic activity is deteriorating. A recent shift in market dynamics is already in the works. Once-high-flying tech stocks, like Apple and Microsoft, which helped drive the S&P 500 to impressive gains earlier this year, dragged down the index in the third quarter.