The Fed Just Got Less Dovish
Here’s What Matters.
Big Picture: Yesterday’s FOMC decision and Powell’s press conference revealed subtle but crucial shifts. The Fed’s once famously dovish lean? It’s fading. Markets freaked out and for good reason.
What Changed?
The Fed seems less willing to cut rates without seeing meaningful progress on inflation.
They’re signaling a move away from “asymmetrically dovish” territory and into something more balanced. Translation: Don’t expect the easy-money “Fed put” anytime soon.
Market Reaction:
Stocks got smoked (S&P 500 -3%), worst FOMC decision day performance since ’01. Gold -2%, Bitcoin -6%, Treasuries -2%, and the Dollar +1%.
It was broad-based risk-off, and that might just be the start if the Fed stays on this new path.
Our Take:
We’ve been warning about a risk-off environment emerging by mid-2025. This latest Fed pivot adds fuel to that fire.
We’ve managed similar transitions before. Stick to your process and remain disciplined. We’ll keep you in the loop as conditions shift.
What About the Politics?
Lost in the Fed chaos was Trump’s push to force an earlier Debt Ceiling vote or scrap it entirely.
If that happens, the anticipated $700-800bn Treasury spenddown early next year could vanish. Without that liquidity, the dollar stays strong, conditions tighten, and markets feel more pressure.
Why It Matters:
A less supportive Fed + political meddling around the Debt Ceiling = more uncertainty.
Wider distributions of possible outcomes mean trickier markets ahead. Investors hate uncertainty.
Bottom Line:
The Fed is sending a message: “We’re not as dovish as we used to be.”
Asset markets are on edge, and potential changes to the Debt Ceiling might remove a key liquidity boost.
Stay nimble, remain patient, and trust your process. We’ll guide you through whatever comes next.
Jason
I'm back home and I will be posting my normal content tomorrow.