The most important signal this week isn’t the 25 bp* decision—it’s the dot plot* inside the Fed’s SEP*. Dots show each policymaker’s year-end interest-rate path. Markets (via CME FedWatch*) expect a cut Wednesday and lean toward more easing by year-end.
If the dots imply fewer 2025–26 cuts than traders price, stocks could wobble while the dollar steadies and long yields hold up. If dots align with market odds—or hint at more 2026 cuts—equities may breathe and breadth can improve.
Why it matters: the dots shape mortgage rates, corporate borrowing, and equity valuations. A “one-and-done” vibe lifts cash flows today but caps multiple expansion. A “cut-then-crawl” path supports a soft landing narrative.
Watch Powell: questions on labor cooling, consumer spending, and balance-sheet runoff will steer the front end of the curve.
Tells to watch on release:
S&P 500 reaction vs. last hour (fade or follow).
2-yr yield direction (tracks Fed path expectations).
Real-time FedWatch shift in probabilities.
Bottom line: the decision is the headline; the dots are the plot twist. A gentle path keeps risk appetite intact; a higher-for-longer set of dots favors quality, cash-rich leaders and tempers small-cap catch-up.
📚 Decoder
Basis point (bp): One hundredth of a percent; 1% equals 100 bp.
CME FedWatch: Tool tracking market-implied probabilities of future Fed rate moves.
Dot plot: Fed officials’ projected year-end policy rates by year.
SEP (Summary of Economic Projections): Fed projections for growth, inflation, unemployment, and rates.
⏱️ That’s this week’s Signal Spotlight.
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Educational only—not investment advice.