Hi traders,
Markets have already voted. Prediction platforms put a 25bp hike to 3.75–4.00% at 80–97% (CME FedWatch ~86–90%, Polymarket 79.5%, Fisclear 97%). That is unusual conviction heading into a meeting.
Warsh said he would take his cues from the market, specifically real rates and the Treasury curve, while admitting that reading those signals is “an imperfect business.” The signal is no longer modest. The 10-year is at its highest level since 2007. Long-term Treasuries are pressing above 5%.
In July the Committee was already 9–3 hawkish, with no dovish dissents and three members pushing for higher rates before the August inflation prints. On the data Warsh himself cited, a hike is the more coherent move. A hold is still available. He already said markets can mislead.
Core CPI is 2.4% y/y; the headline spike is energy (gasoline +3.9% m/m, energy +16.3% y/y). Geopolitics is unsettled. Trump has publicly pressed for lower rates and appointed Warsh, so there is almost no political cost to standing still. All of that gives him room to hold without inventing a new framework, even if it stretches the one he already stated.
That stretch is the point. If the data, the curve, and the prediction markets all point the same way and the Committee holds anyway, the question is no longer “what does the model say.” It is whether the FOMC can still be trusted to act on its own doctrine. Credibility, once spent that way, is expensive to rebuild.
Let’s see today.
Hope you took our TEM 0.00%↑ swing trade yesterday. It was our first posted trade on the watchlist. The momentum was incredible!
There are some powerful setups into this weeks and for later on today, in case the market picks up momentum to the upside.
Let’s start!
