Sell-side unanimity on Wednesday's hike hides a 50-basis-point split over December
CME's FedWatch has Wednesday's quarter point at 94.5%, up from under half a month ago, and the ten-year at 5.04% shows bond desks bought it in advance. The forecasts still diverge on what follows.
The Investor · Invest desk
What happened
- CME's FedWatch tool put the odds of a quarter-point hike at Wednesday's FOMC close at 94.5%, which would lift the federal funds rate to 3.75%-4% from 3.50%-3.75%, up from under 50% odds a month ago.
- A Wall Street Journal survey found nearly every major bank now expecting the hike, with Barclays, Citigroup, JPMorgan, Morgan Stanley and UBS forecasting 50 basis points of total tightening by year-end.
- The 10-year Treasury yield touched 5.04% this week, its highest since July 2007, and the two-year, more sensitive to policy, reached its highest level since July 2024.
- Bitcoin traded around $75,700 on Tuesday, down about 3.2% on the day, after the Clarity Act failed its Senate cloture vote.
- July's decision to hold at 3.50%-3.75% passed by a 9-3 vote, with three policymakers already pushing for a hike, and a stronger-than-expected August jobs report followed.
Why it matters
- What it limits constraint With 94.5% of the hike in the price, Wednesday's decision has little room to move portfolios by itself; the guidance about December is what will move them, and that is where forecasters are 50 basis points apart.
- What doesn't add up contradiction Decrypt attributes the week's largest crypto loss to a failed Senate cloture vote, so Bitcoin's 3.2% Tuesday is weak evidence of rate transmission for anyone building the Fed case out of it.
- Who has to decide decision Buyers of a 5.04% ten-year are choosing between Goldman's one-and-done and the hawks' two-more, and 104 basis points over the post-hike ceiling is what they are being paid to take that side.
- Who's exposed exposure A hike tests Warsh's independence claim in public, with the White House already threatening trade measures over the level of rates and the midterms two months out.
Next story · Leadership · yesterday
Warsh's Bangkok interview is the last Fed speech before the October rate meetingConfirmed2 publishers
Goldman Sachs has this week's quarter point and nothing after it [9]. Bank of America, Deutsche Bank and RBC have 75 basis points of tightening for the year, which leaves two more quarter points once this one is banked [7][18]. The desks that agree on Wednesday are 50 basis points apart on where the funds rate sits in December [18]. Jefferies is outside that range altogether with a December cut, and Oxford Economics with one in 2027 [11].
Against the 3.75%-4% band a hike would create, a 5.04% ten-year pays 104 basis points over the upper bound [19]. Headline CPI ran 3.4% annually in August, with core at 2.5% against a 2% target. Oil prices pushed higher by the conflict with Iran have added pressure that neither tariffs nor rate cuts easily offset [23][16]. A 4% ceiling would put the policy rate 60 basis points above headline inflation and 150 above core [24].
Bitcoin's move has its own cause. The $75,700 print is 7.7% below the September peak near $82,000 [14][21], and Decrypt puts the line at $73,200, with a daily close below it opening $71,000 and then $66,900 on technical indicators, cancelling the golden cross [25]. That lower level would be 11.6% under Tuesday's price [22].
Trump handpicked Warsh in January and, at the swearing-in in May, urged him to be "totally independent" while making clear he expected lower rates [8]. Trump, JD Vance and Scott Bessent have all pushed publicly for cuts in the past two weeks. Trump threatened to halt trade with countries running surpluses with the United States if rates do not come down [10]. Warsh has said the president has had no influence on Fed decisions [12]. The hike arrives two months before the November midterms, and partly because of the tariff and Iran-conflict policies Trump has championed [15].
The level is paid for. The disagreement is over the count, and Decrypt argues the repricing is happening now precisely because nobody knows how many more hikes are coming [17]. In my view the two-year carries more of Wednesday's information than the ten, because a 5.04% long yield compensates a hold-high path considerably better than it compensates two more hikes. The statement could point at a second hike, and the hawks' 75 gets marked into the curve [7]. Or the committee calls this sufficient, and Goldman's path leaves the front end expensive [9]. Or the data cools and Jefferies' December cut stops looking like an outlier [11]. The case against owning the long end here fails if the Fed stops at one. The case for owning it fails if 75 basis points arrives by year-end. That would put the ceiling at 4.5% against a 5.04% ten-year, a spread of 54 basis points [20].
What to watch
- Whether Wednesday's statement points at a second hike, and where the two-year yield closes after it.
- Whether the Clarity Act gets another cloture attempt. A second vote would separate the crypto bid from the rate story.
- Whether Warsh repeats that the president has had no influence once the hike is delivered.
Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence62
- Adoption
- Not scored
- Hype gap+15
- Incentives40
- Confidence66
Perspective Coverage
12 publishers- Builder
- Builder 5%
- Operator
- Operator 21%
- Investor
- Investor 74%
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
CME's FedWatch tool puts the odds of a 25-basis-point hike Wednesday at 94.5%, which would push the federal funds rate to 3.75%-4% from 3.50%-3.75%.
- [2]
The 94.5% probability is up from under 50% a month ago; the Fed has not raised rates since 2023.
- [3]
The Fed held rates steady at 3.50% to 3.75% in July by a 9-3 vote, with three policymakers already pushing for a hike, and a stronger-than-expected August jobs report followed.
- [4]
The 10-year Treasury yield touched 5.04% this week, its highest level since July 2007, as traders priced in both the hike and a longer stretch of elevated rates.
- [5]
The two-year yield, more sensitive to Fed policy, hit its highest level since July 2024.
- [6]
A Wall Street Journal survey published this week found nearly every major bank now expects a hike on Wednesday, with most, including Barclays, Citigroup, JPMorgan, Morgan Stanley and UBS, forecasting 50 basis points of total tightening by year-end.
- [7]
Bank of America, Deutsche Bank and RBC are calling for 75 basis points of tightening this year.
- [8]
Trump handpicked Warsh for the Fed chairmanship in January and, at his swearing-in in May, urged him to be "totally independent" while making clear he expected lower rates.
- [9]
Goldman Sachs sits at the dovish end of the hikers, penciling in just this week's quarter point and nothing more.
- [10]
Trump, Vice President JD Vance and Treasury Secretary Scott Bessent have all publicly pushed for cuts in the past two weeks, with Trump going as far as threatening to halt trade with countries running surpluses with the U.S. if rates don't come down.
- [11]
Jefferies forecasts a rate cut in December and Oxford Economics one in 2027.
- [12]
Warsh has said the president has had no influence on Fed decisions.
- [13]
On Tuesday, Bitcoin swapped hands at around $75,700, down about 3.2% on the day after the Clarity Act, crypto's market structure bill, failed its Senate cloture vote.
- [14]
Bitcoin is well off its September peak near $82,000.
- [15]
The hike lands two months before the November midterms, where polls show voters frustrated with high prices and borrowing costs, and it is arriving in part because of the tariff and Iran-conflict policies Trump himself has championed.
- [16]
Oil prices, pushed higher by the ongoing conflict with Iran, have added price pressure that neither tariffs nor rate cuts can easily offset.
- [17]
Decrypt argues it is less about the hike itself and more about not knowing how many more are coming, so markets are repricing now, before the Fed speaks.
- [18]
Taking Wednesday's 25 basis points as given, the 75-basis-point forecasts leave two further quarter points this year and Goldman's leaves none, a 50-basis-point disagreement about the year-end funds rate.
- [19]
A 5.04% ten-year yield sits 104 basis points above the 4% upper bound the hike would set.
- [20]
If 75 basis points of tightening arrives this year, the funds rate ceiling reaches 4.5%, leaving a 5.04% ten-year yield just 54 basis points above it.
- [21]
Tuesday's $75,700 Bitcoin price is about 7.7% below the September peak near $82,000.
- [22]
The $66,900 downside level cited by Decrypt is about 11.6% below Tuesday's $75,700 price.
- [23]
Headline CPI ran at 3.4% annually in August, with core inflation at 2.5%, both above the Fed's 2% target.
- [24]
A 4% funds rate ceiling would sit 60 basis points above August headline CPI and 150 basis points above core.
- [25]
Decrypt reports BTC at $73,200 as the line in the sand: a daily close below it opens the door to $71,000 and even $66,900 based on technical indicators, cancelling Bitcoin's current golden cross.
Sources
12 independent publishers whose own reporting we read for this story.
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2 articles · September 16, 2026
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2 articles · September 14, 2026
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1 article · September 14, 2026
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13 articles · September 16, 2026
- cryptopolitan.comFOMC Decision Today: Markets Price 92% Odds of a Hike to 3.75% – 4.00%
1 article · September 15, 2026
- decrypt.coWall Street Bets on Fed Rate Hike: Here's What It Means for Bitcoin, Bonds and Trump
1 article · September 15, 2026
- en.sedaily.comTrump Presses Fed for "Lowest Rates in World" Before Rate Decision
4 articles · September 15, 2026
- fortune.comWith his credibility on the line, the Fed’s Warsh will be forced to raise interest rates this week
1 article · September 14, 2026
- scmp.comAhead of US Fed meeting, Trump says America should have world’s lowest interest rate
2 articles · September 15, 2026
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3 articles · September 15, 2026
- semafor.comTrump says US interest rates should be lowest in the world
3 articles · September 16, 2026
- thedailyupside.comWall Street Bets on Rate Hike From a Fed Hemmed In by Persistent Inflation
1 article · September 13, 2026