The Fed: Why the Rate Hike Isn't the Real Story

This Wednesday, September 16, 2026, the markets' attention is fixated on the Fed. A rate hike seems inevitable, but it's a mistake to focus solely on that. In reality, the market has already priced in this information. The real question, the one that will dictate future movements, will be addressed much later, during the press conference. This is a pivotal moment. It's also an intense period for me, as I'm finalizing the launch of a colossal project I've been working on for a year: about thirty new YouTube channels on topics like history, economics, and philosophy, all in six languages. But for now, let's focus on what's at stake tonight.

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An Already Pressured Market Context

For the past week, everything has revolved around oil and interest rates. Wall Street has logically retreated, with average losses of around 0.6% to 0.7% for the main indices. The pressure is mainly coming from the 10-year US Treasury rate, which surpassed 5% during the session. This is a high we haven't seen in nearly 20 years. In concrete terms, this means the United States is borrowing at a much higher cost, which has direct repercussions, particularly on real estate. Obviously, it's harder to finance a first home purchase when rates are at this level.

The Oil Equation and Its Impact on Inflation

Oil is adding its own tension. With traffic nearly at a standstill in the Strait of Hormuz and a backup Saudi pipeline recently cut off, prices are soaring. A barrel, whether it's WTI or Brent, is trading above $104-105. This is excellent news for producer countries, but very bad news for consumers and inflation. Consequently, it puts additional pressure on the Fed to act more firmly. The psychological threshold is really $100. As long as we stay above it, the mood won't be calm.

By the way, a nuance should be added regarding the impact of this shutdown pipeline. Its theoretical capacity is 7 million barrels per day, but in practice, due to logistical limitations at the destination port, the actual flow was closer to 3 to 4 million. The loss is therefore significant, but less catastrophic than the raw numbers might suggest.

The Fed: 3 Points That Really Matter Tonight

The quarter-point hike is expected by 90% of investors. It is therefore, as they say, already "priced in." Tonight, it's not the 8 PM decision that will move the market, but Kevin Walsh's speech at 8:30 PM. Here are the three elements I will be watching closely:

1. Dissenting Votes: Will there be committee members who oppose the hike? If so, how many? This would provide a valuable indication of the intensity of internal debates.
2. Economic Projections: The Fed's forecasts for the future, especially for 2027, will be scrutinized to discern the future trajectory.
3. The Tone Used: Will the speech be firm, reassuring, pessimistic? Every word will be important for anticipating the next steps. This is where the real stakes of the evening lie.

A Lesson from the Past: When the Market Defies a Central Bank

To illustrate that a central bank is not all-powerful, I like to remember what happened on another September 16, in 1992. The Bank of England was attacked by hedge funds that considered the British pound overvalued. To defend its currency, it first raised its rates from 10% to 12%… without success. Facing continued pressure, it then promised to raise them to 15%! Imagine two rate hikes announced on the same day.

And yet, it wasn't enough. That same evening, the British government had to capitulate and withdraw the pound from the European Monetary System. The lesson is clear: the market, when coordinated and determined, can have the final say against an institution.

Conclusion

In short, don't get distracted by the 8 PM announcement. With the premise of a hike already accepted, the real game will unfold at 8:30 PM during the press conference. That's when volatility will be at its highest. So be particularly cautious. It's not necessarily the best time of the week to trade without a solid framework and iron discipline. Stay curious!

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