The Fed meets October 27–28 after raising its target range a quarter point to 3.75%–4% in September in a unanimous 12-0 vote, citing elevated inflation. Minutes from that meeting showed most officials expected another increase would likely be appropriate by year end. Markets don't expect that hike to come next week, though. Futures put the odds of an October increase at just 12–17%, with the next quarter-point hike priced in for December. The tension: consumer prices rose 3.7% over the 12 months through September, up from 3.4% in August, while core inflation sits at 2.6%. Households are feeling it too. Credit card balances climbed to $1.26 trillion in Q2, and adjustable-rate mortgages hit their highest count in five and a half years, meaning more borrowers are directly exposed to where rates go next. The key question for bond investors isn't just whether the Fed moves Wednesday, but what it signals about December.
Sources: Federal Reserve, BLS, NY Fed, CME FedWatch #FixedIncome #FederalReserve
#FOMC #InterestRates #Inflation #FreedomCapitalGroup
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