To The Moon

Wall Street may get the rate decision it expects this week, but that doesn’t necessarily mean markets are in the clear.

The Federal Reserve meets on October 27–28, with markets widely expecting rates to remain at 3.75%–4.00%. The bigger question is whether Chair Kevin Warsh signals that another increase could be coming in December.

According to a Reuters poll published October 20, all 100 economists surveyed expected a December rate hike, highlighting how much inflation concerns have shifted expectations. 

📊 Why the Fed Is Under Pressure

Three factors are complicating the outlook:

1. Inflation remains stubborn

Higher oil prices are adding to inflation pressures, while price increases in other areas could make the problem harder to contain. If inflation remains elevated, the Fed may have less room to hold rates steady.

2. The economy is holding up

Resilient consumer spending, a relatively stable labour market and strong AI-related investment suggest the economy may be able to withstand tighter monetary policy. That could strengthen the argument for another hike.

3. Treasury yields matter too

Bond yields have been volatile as investors reassess the likely path of interest rates. Higher yields can increase borrowing costs and put pressure on valuations, particularly for growth stocks whose expected earnings lie further in the future.

💻 What Could This Mean for Tech Stocks?

The Nasdaq and growth-heavy ETFs such as QQQ could be sensitive to the Fed’s message, even if rates remain unchanged.

• A neutral message: Could help stabilise sentiment, allowing earnings and company guidance to drive the next market move.

• A hawkish message: Could push Treasury yields higher and put renewed pressure on expensive growth stocks.

• A more cautious outlook: Could ease rate concerns, although persistent inflation may limit any market relief.

With Microsoft, Alphabet and Amazon among the major companies reporting earnings around this period, investors face two powerful forces at once: the cost of money and the ability of big tech to deliver earnings growth.

🔍 What Matters Most on Thursday?

The rate decision itself may not be the biggest surprise. Investors will be listening for clues about what could happen next.

Will Warsh emphasise the need to control inflation, or suggest the Fed can afford to wait for more evidence?

There is an important distinction between holding rates steady and signalling that the tightening cycle is over. A pause does not necessarily mean the risk of further hikes has disappeared.

📌 The Bottom Line

The market may already be prepared for a rate hold, but December expectations could become the real driver of sentiment.

If inflation remains elevated and the economy stays resilient, the Fed may have little reason to turn dovish. That could keep yields high and limit the upside for richly valued tech stocks.

For investors, the key signal may not be whether rates change on Thursday, but whether the Fed changes the market’s expectations for December.

For discussion purposes only.