September 17, 2025 – Markets are holding their breath
The financial world is about to get its quarterly dose of Fed-speak, and this time, the stakes feel higher than usual. At 2:00 PM ET today, we’ll get the FOMC decision. At 2:30 PM, Jerome Powell steps up to the podium for what could be one of the most consequential press conferences of 2025.
The Setup: A 25bp Cut That’s Already Baked In
Here’s what we know going in: markets are 91-95% certain we’re getting a 25 basis point rate cut today. That’s not the story. The real drama lies in Powell’s tone and what he signals about the Fed’s path forward.
Since Jackson Hole, Powell opened the door to easing amid a softening labor market. We’ve seen unemployment tick up to 4.4%, and those brutal job revision numbers (911,000 jobs revised downward from April 2024-March 2025) are still fresh in everyone’s minds. But here’s the rub: core PCE inflation is still running at 2.7% – stubbornly above the Fed’s 2% target.
Add in the political complexity of the Trump administration’s tariff policies potentially stoking inflation again, and you’ve got a Fed walking a tightrope between growth concerns and price stability.
What the Markets Are Telling Us Right Now
The sentiment breakdown is fascinating:
Equities are cautiously bullish – The S&P is flirting with 6,627, up about 15% year-to-date, but there’s an underlying tension. The VIX at 16.36 shows investors aren’t exactly sleeping peacefully. Tech has been carrying the load (again), but rotation concerns are real.
Crypto is feeling frisky – Bitcoin sitting pretty at $116,800, up 1% today alone. The ETF flows remain strong, though on-chain activity has cooled. Crypto traders are essentially treating this like a macro play now – dovish Fed equals risk-on equals number-go-up.
Bonds are pricing in dovishness – The 10-year yield around 4.2% with the front-end drifting lower. The curve is expecting cuts, but not aggressive ones.
Gold is having a moment – At record levels near $3,700, gold is getting both the inflation hedge bid and the “uncertain times” premium.
The Twitter Tea Leaves
Social media sentiment has been telling. Volume spiked 30% today with #Fed and #Powell trending. The chatter breaks down roughly like this:
- The Bulls expect a post-cut pump if Powell sounds appropriately dovish, potentially pricing in 2+ more cuts through 2025
- The Bears worry about a hawkish surprise, especially around inflation concerns and tariff impacts
- The Consensus seems to be: it’s all about the tone, not the 25bp cut itself
Three Scenarios to Watch
Scenario 1: The Dovish Dream (60% probability) Powell delivers the 25bp cut with dovish forward guidance. Maybe the dot plot shows fed funds at 3.6-3.7% for 2025 (down from prior projections). He emphasizes labor market weakness over inflation concerns. Market reaction: Risk assets rally 1-3%, BTC potentially pushes toward $120k, gold hits $3,800.
Scenario 2: The Neutral Netherworld (30% probability) We get our 25bp cut but Powell plays it safe – data-dependent language, no big commitments either way. Market reaction: Sideways chop, maybe some “sell the fact” action in overbought tech names.
Scenario 3: The Hawkish Surprise (10% probability)
Powell emphasizes sticky inflation, tariff risks, or – in a true shock – the Fed holds rates steady. Market reaction: Sharp sell-off across risk assets, VIX spike above 20, crypto gets liquidated.
The Bottom Line for Traders and Investors
Here’s what I’m watching for in those crucial first 30-60 minutes after Powell starts speaking:
- Initial market reaction – Expect whipsaws as algorithms parse every word
- The real move – Often comes 15-30 minutes in once humans start interpreting the algo moves
- Cross-asset confirmation – Watch if bonds, stocks, and crypto are telling the same story
The base case remains a dovish-ish Powell with a 25bp cut, but the real money will be made (or lost) on the nuances of his forward guidance. In a year where we’ve seen everything from AI euphoria to tariff concerns to labor market softening, today’s press conference could set the tone for Q4 and beyond.
One final thought: Powell has historically shown he’ll prioritize data over political pressure. But with unemployment rising and inflation still sticky, he’s got to thread the needle between appearing responsive to economic conditions without seeming to cave to political expectations.
Markets hate uncertainty, but they hate surprises even more. In about three hours, we’ll know which one we’re getting.
What’s your take on today’s Fed meeting? Are you positioned for dovish, hawkish, or just planning to trade the volatility?
Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Markets are unpredictable, Fed chairs even more so. Trade responsibly.