Warsh Fed Hike Expected as Markets Eye Dot Plot and Rate Targets

The Federal Reserve is set to raise its benchmark interest rate by 25 basis points on Wednesday, marking the first hike since July 2023. This move would push the target range to 3.75%-4.00%.

Interest rate futures are pricing in a 90% probability of this outcome, up from around 70% before the latest inflation data was released.

The real focus will be on the dot plot and Chair Kevin Warsh's press conference, as these are seen as key indicators of future policy direction. A hawkish dot plot could send long-duration yields higher and the TLT lower.

Goldman Sachs, J.P. Morgan, HSBC, and Deutsche Bank all expect a quarter-point move, citing stronger-than-expected price data and oil prices climbing above $100 a barrel.