We get the Fed on Wednesday.
The interest rate market has priced in a near certainty of a quarter point cut, and we should expect the Fed to do nothing to disrupt these expectations.
As you can see in the chart below, the 2-year yield (the market determined interest rate) tends to be the de facto guide for Fed policy. It has historically led on the way up, and on the way down.
That said, after this week's cut, the spread between the 2-year yield and the effective Fed Funds Rate will narrow to only about 5 basis points.
For a Fed regime that's becoming more fractured on the policy path, this narrowing would support a "hawkish cut." If so, we should expect the December Summary of Economic Projections (SEP) to be little changed from the September SEP (snapshot below) — where the median dot for the Fed Funds Rate was 3.4% in 2026 (implying only slightly more than one quarter point cut next year).
