Markets Hold Breath as Fed Decision Looms – Will Powell Crash the Party?
Wall Street's stuck in limbo—traders glued to their Bloomberg terminals like crypto degens watching a 10x altcoin teeter on liquidation.
The Fed's rate decision drops Wednesday, and nobody's placing big bets until Powell shows his cards. Classic institutional cowardice—meanwhile, Bitcoin's already pricing in three cuts by Q2 2026.
Funny how traditional markets still need hand-holding from central bankers while DeFi protocols execute $20B liquidations algorithmically before breakfast.
All eyes on Fed
With the Federal Reserve interest rate decision a near certainty next week, trader sentiment pushed the Dow Jones Industrial Average to a record close above 46,000. The blue-chip index’s jump also reflected across the other major gauges, with the benchmark S&P 500 and tech-heavy Nasdaq extending gains at their respective record highs.
Although the consumer price index report for August showed prices rose 0.4% compared to the forecast 0.3% and July’s 0.2%, the Core CPI came in line with projections, and Wall Street maintained its largely bullish bet for a 25% Fed rate cut next week.
The outlook comes down to economic data, with the latest jobs reports pointing to continued labor market weakness and inflation remaining sticky. However, investors’ bet on a Fed rate cut stands at over 90%, and there is a belief the central bank will make further cuts before the end of the year.
“With the US CPI numbers matching the consensus forecasts, the main market mover this morning is jobless claims, which came in far higher than expected,” Mohamed El-Erian, president Queens’ College, Cambridge and Allianz advisor, commented.
“The overall signal from this week’s data is clear—and one I’ve stressed for some time, now increasingly echoed by others: inflation may still sit above the Fed’s target, but the greater risk to the economy lies in the pace and severity of labor market weakening.”
Analysts have lifted forecasts for the major gauges, both for the end-of-year outlook and for 2026.
