Fed poised for 25bp hike as dot-plot takes center stage

Markets broadly expect the Federal Reserve to raise its policy rate by 25 basis points to 3.75%–4.00%, with rate futures pricing in roughly a 90% chance of the move. The key signal will come from the Fed’s dot plot and Chair Warsh’s post-decision remarks, which could point to further hikes or a near-term pause. A hawkish dot plot would push long-term yields higher and TLT lower, while signals of a pause could bring relief. Economists from Citi and other firms have seen a hike as likely, with some forecasting two moves, highlighting that Warsh’s guidance will be crucial given the committee’s divisions.