Markets feel boxed in today. A 0.4% MoM CPI would be in line and won’t automatically hand the Fed’s hawks the reins.
More importantly, FED FUNDS FUTURES FOR DECEMBER 2026 are priced perfectly for 1 hike. Today’s move needs a scorching inflation print to keep running. Anything merely in line with expectations will likely trigger profit-taking. That’s the setup and the sequence we’ll break down today.
Image above shows that 1 rate hike for 2026 is baked in. September pricing is at give or take %70. See FED watch tool below:
That means a lot of emphasis is going to be on next week FED rate setting meeting.
3 things worth highlighting:
- It’s rare for the Fed to swing from cuts back to hikes within the same business cycle, though it’s not unheard of.
- Hiking into the midterms is politically fraught and could be read as nudging the balance of power.
- My take (speculative): today’s CPI likely won’t be hot enough to price in a full hike, so the trade shifts to a hawkish hold.
If Warsh hikes next Wednesday at the Fed meeting, the market will have to take him seriously, and so will I, on delivering low inflation. At that point, the trade shifts to one question: how far does this hiking cycle go? The market isn’t ready for that.
What the market, equity markets in particular, are ready for is a disappointment of the inflation data today. The bar for a surprise is extremely high.
That leaves equities as the next catalyst: a chance to snap a 4-day losing streak and finish with a bullish close. Historically, the S&P 500 has been bearish on the 9/11 anniversary just three times since 2002, and even the worst of those sessions ended down only 0.14%.
We’re in a moment where positioning and expectations are aligned—and that could give equities a meaningful lift. Bitcoin and Gold have been covered in depth.
Trade Strong
Miad
*The Charts and Analysis was originally shared on our private discord group accessible here: SPECULATORS TRADING CHANNEL
**THIS IS NOT FINANCIAL ADVICE, YOU MAY LOSE ALL YOUR MONEY FOLLOWING THE ANALYSIS ABOVE. THERE ARE NO GUARANTEES IN TRADING. THE RISK IS REAL.