Fed signals stay firm: markets price about 81% odds of a December hike after Logan backs 50 bp more

The September FOMC hiked 25 bp to 3.75%-4.00% on a 12-0 vote. On 5 Oct, markets priced about 81% odds of a December hike, while FXStreet says October hold odds reached 77%. Logan said on 1 Oct that the target range needs to rise an additional 50 bp or more.

Markets are focused on the path of rates rather than just the next meeting. With the Fed leaving the door open to more hikes, that tends to support the dollar and Treasury yields and pressure non-yielding assets such as gold and crypto.

In the September dot plot, 16 of 18 officials projected at least one more hike this year, and the median neutral-rate dot rose from 3.06% to 3.25%. August core PCE was 3.0%, below the roughly 3.3% expected. Watch Fed speakers and the FOMC minutes for confirmation of this direction; the Fed's quiet period begins Saturday, 17 Oct.