The Fed decision lands Wednesday, October 28, at 2:00 PM ET, and the market has already made up its mind about it. The part that is still open is December.
What is the market pricing for the October 28 FOMC decision?
CME FedWatch shows a 91% probability of a hold in the 3.75-4.00% target range and 9% for a 25bp hike. Other trackers read roughly 10% hike odds. Either way, a hold is the base case by a wide margin.
The statement is released at 2:00 PM ET, with the press conference at 2:30 PM ET.
Why does December matter more than October?
The same FedWatch table prices the December 9 meeting very differently: 72% for one 25bp hike, 7% for two, and only 21% for no change. That adds up to a 79% chance of at least one hike by year end.
So tomorrow is a speed bump on the way to a decision the market thinks is mostly made. A hold with inflation language that sounds softer than expected moves the December column. The October column barely moves.
How are stocks and yields positioned going in?
The S&P 500 closed Monday at 7,676.77, up 0.7%. The 10-year Treasury yield sits at 4.986%, almost exactly where it was Friday. Equities rallied into the meeting while yields went nowhere.
That tells you what the equity market considers a good outcome: a hold, and no change in the December path. A hawkish shift in the statement would hit stocks and yields from opposite sides of that setup.
What else prints on FOMC eve?
Today brings September durable goods (consensus +1.7%, prior -0.1%) and Conference Board consumer confidence for October (consensus 80.5, prior 81.9, 10:00 AM ET). Neither changes the Fed's math, but a weak consumer print would feed the case against a December hike.
Microsoft and Alphabet both report Wednesday after the close, a few hours after the Fed statement. Amazon follows later in the week. The same afternoon carries the rate decision and two of the largest index weights, which compresses a lot of volatility into one session.
What would actually surprise the market?
A hold is not a surprise. The surprise columns are narrow: a dissent in favor of a hike, a statement that drops the language on further tightening, or a press conference that treats December as live or dead.
Watch the December column on FedWatch after 2:30 PM ET. If 79% becomes something under 50%, the Fed has said something the market did not expect. If it stays near 79%, tomorrow was a non-event that everyone traded as an event.
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