An employee passes share price information displayed on an electronic ticker board inside the London Stock Exchange Group Plc's offices in London, UK. File photo: BLOOMBERG/LUKE MACGREGOR
The key question for markets is whether the Fed will also signal it could slow further rate hikes, in a so-called dovish pivot. With a 75 bps increase in the Fed’s key rate on Wednesday to a range of 3.75%-to 4% priced in, traders are split on the size of a December move while futures market are pricing in a roughly a 40% chance of another 75 bps increase.
“We suspect [Fed] chair [Jerome] Powell will try very hard to avoid saying anything that might be misconstrued as a signal that the inevitable step down in the size of tightening is a pivot towards the end of the tightening cycle,” said Kevin Cummins, chief US economist at NatWest Markets.