Three weeks ago the market priced a 70 percent chance the Fed would hike back-to-back in October. On Friday, LSEG data put the odds at just 18 percent (Dow Jones’s week-ahead note) — another Dow Jones wire put it at 26 percent the same day; either way, the swing began September 29, when New York Fed President John Williams said “one further upward adjustment may be appropriate late this year” but added “there is no need for urgency” — which Evercore ISI read as an unambiguous pushback against an October move, a stance most consistent with skipping to December. Fed Vice Chair Philip Jefferson cemented the shift on October 1: officials “may take more time” before adjusting policy again.
Then the data cooperated. September payrolls rose just 29,000, well below the 84,000 consensus, with July and August revised down a combined 60,000 and unemployment up to 4.2 percent. “The report is likely to reignite the debate over whether the labor market is strong enough to absorb further policy tightening,” Quintet’s Daniele Antonucci said.
Against that backdrop, Wednesday’s minutes of the September 15-16 meeting — where the Fed hiked 25bp, the first increase in three years, with a 16-2 majority projecting another hike this year — will be read for three things: how officials weighed energy-price pass-through, whether more members think rates are still not restrictive enough, and what data would trigger the next move. The Fed’s own median still sees the funds rate at 4.1 percent through end-2027; futures price something materially firmer, a probability-weighted midpoint near 4.69 percent by late 2027. The minutes do not need to sound dovish to move markets — they just need to undercut the market’s higher-for-longer plateau.