The Federal Reserve left rates unchanged as was widely expected but equities, already weak coming into the event, fell further while rates climbed as the overall takeaways were hawkish. We won’t bury the lede. Perhaps the key message from Powell: “If we don't see that progress (on inflation) then you won't see the rate cut." Only Stephen Miran remained on Dissenter Island, keeping with his desire for cutting (25bp). There was talk of potentially three dissenters. After joining Miran as a Dissenting Cutter, Chris Waller returned back to the rest of pack in voting to keep rates unchanged.

The median dot still calls for only one rate cut this year. Markets had already pushed out the prospect of rate cuts over the last few weeks, pricing in just one cut coming into today. However the complexion of the plot shifted hawkishly. The range of rate expectations compressed from 1.8% (2.1% - 3.9%) to 1.0% (2.6% - 3.6%), which means uber-Dove Miran took his fed funds target up 50bp. Markets are now pricing in less than one cut the rest of the year (~18bp), versus one cut (26bp) yesterday and about 2 cuts (60bp) one month ago. Equities were already trading lower before the rate decision, with the S&P down 0.6%. The index drifted lower heading into Powell’s press conference at 2:30pm ET and continued to fall during it, eventually ending the day down 1.4%.

Treasury yields moved sharply higher. They actually fell right after the initial statement came out, but the 2yr eventually jumped from 3.70% to 3.79%. Longer-tenors also rose. That in turn took the Dollar higher, as the US Dollar Index broke through 100. Gold and Bitcoin fell to their lows on the day, though Bitcoin seemed to be holding up better relative to other assets.