watch the Fed's projection dot plot, not the Fed Funds rate

watch the Fed's projection dot plot, not the Fed Funds rate the 25bp/0.25% cut on September 17th 2025 will happen, and it's mostly priced in it's the future interest rate policy guidance that can amplify a market move either way

based on the current Fed policy guidance available since June 2025, by the end of 2025 the Fed Funds rate should be ≈3.9% current one is 4.25%-4.50%, so we either get a larger than 25bp cut or several rate cuts this year

a cut larger than 25bp is highly unlikely, since the current CME's 30 Day Federal Funds Futures price strongly implies a 4.0%-4.25% target rate this is 25bp/0.25% below the current target rate of 4.25%-4.5%

so the most likely outcome is a 25bp/0.25% rate cut on September 17th 2025, and then at least one more cut in 2025

during the Sept 17th 2025 FOMC meeting, the Fed will publish a new dot plot with the suggested interest rates for 2025, 2026, 2027 and longer-term

how will asset prices react to Fed's interest rate decision? if the FOMC members suggest rates lower than in the June 2025 - expect an upwards rally in assets if the FOMC members suggest higher or non-decreasing near future rates - expect a downward rally/profit taking in assets

September 2025 FOMC dot plot suggests lower rates than in June 2025 the new implied median for end of 2025 is ≈3.6%, which is lower than the ≈3.9% June figure this means you should expect the Fed to cut another 50 bps/0.5% in the next 3 months - likely in two 25bps iterations

the market reacted exactly as I anticipated in a prior post a lower median in the FOMC dot plot indeed pushed asset prices up. and you had plenty of time after the Fed's dot plot was published to enter into that leg look at gold, silver and S&P500 😄