Overview
- Futures pricing points to a near‑certain 25 basis point reduction on Wednesday, which would set the federal funds rate around 3.50%–3.75% with policymakers operating without the latest jobs and inflation data.
- Analysts widely anticipate a "hawkish cut," with the statement, dot plot and Chair Jerome Powell’s remarks expected to raise the bar for further reductions next year.
- Long‑term Treasury yields have climbed to multi‑month highs, with the 10‑year near 4.17% and the 30‑year around 4.82%, reflecting higher term premiums and concerns that sustained inflation and fiscal pressures could cap declines.
- Bond managers are rotating toward intermediate maturities as they position for a shallow easing cycle, and several banks now project fewer cuts in 2026 with debate over a neutral rate near 3%.
- Dissents are considered likely from both hawkish and dovish FOMC members, and leadership uncertainty around Kevin Hassett as a potential successor to Jerome Powell is a growing factor even as markets price only modest additional easing in 2026.