It feels like today is the day investors have been waiting for as the S&P 500 has been trading in a 100pt range (6.8k - 6.9k) since Thanksgiving. Ahead of the meeting futures were trading slightly lower overnight but have improved over the last hour. Markets widely expect the Federal Reserve to cut rates by 25bps but if you listened to the commentary from Fed officials over the last month it is clear that coming to that consensus won’t be as easy as a KAT slam dunk. Congrats to the Knicks, enjoy your trip to Vegas. Speaking of cats, the number of dissents today, which are also widely expected, will be a litmus test for just how good a cat herder Fed Chair Powell is. Along with the rate decision at 2:00 the updated Summary of Economic Projections will also be released but since we still haven’t seen much of the Q4 government economic data those forecasts will likely be taken with a grain of salt. That said investors will comb through that report for signaling but it will likely just highlight the divide on the Committee. In the September SEP the median 2026 DOT projected one additional rate (in addition to today) next year but 8 of 19 officials projected no additional cuts. Fed Chair Powell will lead three more meetings before his term ends next year and markets are currently pricing in about a 50% chance of a cut over that timeframe. Since the start of December Treasury yields, particularly at the long end of the curve have been moving higher with the 10yr up ~20bps to 4.2%.

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