Fed decision trade: What JPMorgan traders see the market doing, based on these scenarios

According to the CME Group's FedWatch tool, traders are pricing in a 99% probability of rates going up by 25 basis points to a range of 5.25%-5.50%. That said, comments from Fed Chair Jerome Powell could sway the market one way or another, depending on whether he signals more rate hikes are ahead — or if the central bank is close to ending its tightening campaign.

Right now, the market sees only about a 30% chance of one more rate hike this year, JPMorgan traders said. "What kind of data would induce more hikes? Core CPI MoM printed 0.4% and 0.2% in June and May; if we see core inflation revert higher from prior levels, we may see Fed continue to tighten," they said. The S & P 500 would fall 0.5%-1% under this scenario. 1%-2% chance — hawkish skip: The S & P 500 would rally under this outcome, JPMorgan said.

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