S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
ING strategists Francesco Pesole and Frantisek Taborsky note that markets fully expect the Federal Reserve to raise rates by 25bp to 4.0%, with a surprise hold seen as materially negative for the Dollar. They argue the FOMC is likely aware of Treasury risks and will keep a hawkish tone, with Chair Kevin Warsh’s openness to further tightening supporting the Dollar and discouraging large USD shorts.
Fed hike and guidance in focus
“Markets are fully expecting a 25bp hike to 4.0% today, and a surprise hold or strong dovish dissent could have a materially negative impact on the dollar. But that’s a small risk, as the FOMC is likely mindful of any adverse Treasury-market implications. Openness to further hikes by Warsh can leave the dollar broadly supported.”
“We expect the Fed to raise rates by a consensus 25bp to 4.0% today. Markets are pricing in 23bp for today, 52bp by year-end, and 89bp by June. A surprise hold would likely deliver a big blow to the dollar: both through the dovish repricing in front-end rates and a likely selloff in the back end.”
“That, in our view, also argues for a hawkish message. A dovish hike may not be enough to convey the monetary policy discipline bond investors currently demand, particularly given the amount of tightening already priced into swaps. Recent bond market headlines may even have helped bring some FOMC members behind a hike, reducing the likelihood of visible dissent, at least for now.”
“If anything, the new economic projections pose some risk of dovish disappointment. Inflation may be revised slightly lower, while our economists expect the median dot plot at 4.0% in both 2026 and 2027, well below market pricing. Even so, we think Chair Kevin Warsh’s press conference will be the key driver of the market reaction.”
“Incidentally, the external picture argues against building sizeable USD shorts at this stage. Brent is aiming for $110/bbl, as Iran-Gulf negotiations are delayed again, and softness in tech stocks is weighing on overall sentiment. These conditions suggest markets are more likely to fade a negative dollar reaction to the Fed today, unless triggered by a significant dovish surprise, rather than a positive one.”
