FOMC is expected to hold on Wednesday, but it's likely not done with rate hikes

What happened

The Federal Open Market Committee is widely expected to keep its federal funds rate target range at 3.75%-4.00% at Wednesday's decision, with the CME FedWatch tool showing a 90.6% probability of no change, up from 84.5% a week earlier.

Confirmed

Global impact / market context

Holding rates steady affects borrowing costs for companies and households. If the Fed instead signals a December hike, interest-sensitive assets like the iShares 20+ Year Treasury Bond ETF (TLT) could face pressure, because bond prices typically fall when expected rates rise.

Analyst inference

Rate traders price a pause now but a likely quarter-point December increase, to 4.00%-4.25%, at 75.1% probability. That shift would raise costs on borrowed money and could slow capital spending, while longer-dated bonds remain sensitive to the path of policy.

Analyst inference

What to watch

1. The Fed's Wednesday statement and vote will show whether the target range stays at 3.75%-4.00%. Confirmed
2. Economist Heather Long suggests waiting a few weeks and hiking in December instead of moving this month. Proposed
3. Watch December rate-hike odds and inflation data, since higher expected rates can pressure long-term bond prices and company borrowing costs. Analyst inference

Evidence

• seekingalpha.com