Fed Expected to Hike Rates for First Time Since 2023

Watch on YouTube ↗  |  September 16, 2026 at 14:53  |  2:08  |  Bloomberg Markets
Speakers
Michael McKee — International Economics & Policy Correspondent, Bloomberg

Summary

Michael McKee previews the Federal Reserve's expected first rate hike since 2023. He notes the hike is largely priced in, but Chair Kevin Walsh's press conference and the dot plot are key. Strong August retail sales support the Fed's case, while markets are very short Treasuries and price more hikes than the Fed's median dot plot. The main risk is a negative market reaction if the Fed does not signal continued inflation concern or validate a second hike.

  • Fed rate hike is all but priced in ahead of the decision.
  • Kevin Walsh may avoid forward guidance at the press conference.
  • If the Fed does not signal continued inflation concern, markets could react negatively.
  • Markets are very short Treasuries, creating potential for a disruptive move.
  • August retail sales were stronger than expected, with 13 of 14 categories up.
  • Markets price two 2023 hikes, more than the Fed's previous dot plot.
  • Dot plot validation of a second hike could calm markets; removing it could cause a big move.
Ideas
Michael McKee International Economics & Policy Correspondent, Bloomberg 0:28
Very short Treasuries risk Fed squeeze.
Fed Chair Kevin Walsh may avoid forward guidance, and if he does not signal the Fed remains concerned about inflation and keeps options open, markets could react negatively. Because markets are very short Treasuries, a dovish-sounding Fed could trigger a disruptive move or short squeeze in Treasuries around the hike and press conference.
TLT MED
Michael McKee International Economics & Policy Correspondent, Bloomberg 1:53
Market hike pricing exceeds Fed dots.
Fed funds futures and OIS markets are pricing more rate hikes than the Fed's median dot plot. If the dot plot validates at least a majority expecting a second hike, markets may be comfortable; if it removes that hike, there could be a big move in rates.
OIS Fed funds futures MED
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This Bloomberg Markets video, published September 16, 2026, features Michael McKee discussing TLT, OIS, Fed funds futures. 2 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Michael McKee  · Tickers: TLT, OIS, Fed funds futures