The Federal Reserve (Fed) will announce its rate decision today at 2:00 PM ET, followed by Chairman Kevin Warsh’s press conference at 2:30 PM ET.
Traders typically place more weight on FOMC meetings, which are accompanied by updated economic forecasts and a “dot chart” of interest rate projections. Today’s meeting lacks both. Nevertheless, the result is still extremely important for three reasons.
Unusual uncertainty in the result: Markets still assign a roughly 35% chance of a rate hike, CME futures show. This level of indecision is rarely seen this close to a decision. By now, traders usually converge on a clear hold, bullish or bearish expectation. Citadel, one of the largest hedge funds in the world, predicts growth. The firm is arguing the move would end the prospective recommendations as a policy choice, an outcome Chairman Warsh has long favored.
Bond yields are already rising: Both 10-year and two-year Treasuries the yield broke above key trend lines that define a shallow pullback from 2023 (check the daily signal). Once the breakout is complete, the path of least resistance is now clearly defined to the upside.