FED rate hike today — 93% odds, first since July 2023. Decision drops 3pm ARG time, presser 30min later.
Since 2008, when expectations hit this level, the FED delivered every single time. No exceptions.
The twist? Warsh got appointed by Trump months ago with the explicit mandate to CUT rates. His first move? The exact opposite.
Historical playbook after first hike (7 cycles since 1988):
- $SPX down avg 4% in the next 6 weeks
- Full recovery in the following 5-6 weeks
- +4% at 6 months
- +9% at 12 months (positive in all but 2022)
The dip after rate hikes = buy opp. Pain is short-term, not annual.
JP Morgan's scenarios for today:
- No hike: $SPX -1.25% to -1.75% (signals future hikes)
- +0.25% with "one and done" messaging: $SPX +0.5% to +1%
- +0.25% with "materially higher rates" guidance: $SPX -1% to -2%
Market won't punish the hike itself. It'll punish the threat of more to come.
Watch the tone, not just the number.
Since 2008, when expectations hit this level, the FED delivered every single time. No exceptions.
The twist? Warsh got appointed by Trump months ago with the explicit mandate to CUT rates. His first move? The exact opposite.
Historical playbook after first hike (7 cycles since 1988):
- $SPX down avg 4% in the next 6 weeks
- Full recovery in the following 5-6 weeks
- +4% at 6 months
- +9% at 12 months (positive in all but 2022)
The dip after rate hikes = buy opp. Pain is short-term, not annual.
JP Morgan's scenarios for today:
- No hike: $SPX -1.25% to -1.75% (signals future hikes)
- +0.25% with "one and done" messaging: $SPX +0.5% to +1%
- +0.25% with "materially higher rates" guidance: $SPX -1% to -2%
Market won't punish the hike itself. It'll punish the threat of more to come.
Watch the tone, not just the number.
