The market direction decided by the FOMC?

Schedule

7/29: FOMC Meeting, Policy Statement, Chair Warsh Press Conference

The policy statement will be released at 2:00 PM ET on Wednesday, July 29, followed by the Chair's press conference at 2:30 PM ET. (Cmelitegroup) This meeting does not include the SEP (dot plot).

GDP and the PCE price index will be released the following day, Thursday, July 30, at 8:30 AM ET.

Rate Decision Outlook

Consensus expects a hold (3.50–3.75%), which would mark the fifth consecutive pause.

Economists surveyed by FactSet expect the Fed to keep the benchmark rate at 3.5–3.75%, which would be the fifth straight hold. (CBS News)

However, the key variable is that the probability of a hike has risen sharply over the past week. According to CME FedWatch, the hike probability was 10.7% on July 15 but jumped to 34.7% by July 22 — more than triple. (Yahoo Finance) By another source, the probability of a 25bp hike stood at about 31.5% as of July 23, up sharply from 12.8% a week earlier. (Tradingkey) The cause is a spike in oil prices driven by worsening conditions in the Middle East (Iran) — oil rose roughly 8% this week, pushing Treasury yields broadly higher (2-year at 4.311%, 10-year at 4.714%). (Charles Schwab)

Background: The tone has shifted markedly since new Chair Kevin Warsh took office. At the June FOMC meeting, Governors Waller and Bowman dissented in favor of a rate cut, which contributed to market volatility. (Polymarket) In the June SEP, the 2026 inflation (PCE) projection was sharply revised up from 2.7% to 3.6%, and the median projection among Fed officials suggested the possibility of an additional hike this year. (Wells Fargo Advisors) Views among committee members are sharply divided, with the dot plot showing half expecting a hike this year and half expecting a hold. (Yahoo Finance)

Key point: More important than this meeting itself is the "signal toward the September meeting." If the statement or press conference hints at a possible September hike, the dollar and Treasury yields could strengthen while gold and high-valuation tech stocks could face downward pressure. (Tradingkey)

GDP Outlook

The Atlanta Fed's GDPNow model initially projected Q2 growth at 1.7% (Charles Schwab), later ticking up slightly to 1.68% (as of July 17). (FRED)

Market consensus (advance estimate) stands at 2.3% (versus 2.1% in the prior quarter) (FX Empire), higher than GDPNow's figure, leaving room for a surprise.

Private forecaster Atlas Analytics projects 1.95% growth, noting net exports had been the biggest drag but trade conditions improved somewhat in June. (Atlasanalytics)

Core PCE, released the same day, is expected at 0.1% (versus 0.3% the prior month) (FX Empire). A combination of "solid growth + cooling inflation" would likely be favorable for equities and gold, while "strong growth + inflation surprise" would reinforce hike bets.

Chartinfo's Subjective View

Bitcoin and several indices appear to be finishing a leg down and attempting a rebound. Bitcoin in particular looks like the most credible rebound seen throughout this decline (a weekly-scale regular/hidden bullish divergence).

That said, the key variable remains war-driven oil prices and inflation.

Accordingly, the possibility of a rate hike cannot be ruled out.

The war factor is currently capping the upside.

Even though the market has already priced in some downside ahead of a potential hike, the worst-case scenario should always be kept in mind.

So, as of today (Monday), I plan to take a long position on any pullback and put on a hedge ahead of Wednesday's announcement.

The hedge is set so that the stop-out occurs on whichever side the breakout goes against.

Above all, risk management is what matters most. Technical analysis (RSI, Stochastic) does favor longs, but I believe responding well to the rate-hike variable is what separates surviving from not. What do you all think?