Fed hikes 25bp, dots point higher-for-longer, sell-side scrambles
The Fed raised rates 25bp for the first time since July 2023 in a unanimous 12-0 decision, citing Middle East conflicts and broader geopolitics; the updated dot plot points to one more 25bp hike in 2026 (12 of 18 officials), two additional hikes in 2027, and Chair Warsh said the move removed a "dose of accommodation" [SRC016]. Forecasters moved fast: Morgan Stanley now expects a 25bp hike in March 2027 on top of a December 2026 hike, and Standard Chartered flipped to a December 2026 hike from no change this year [SRC046][SRC055]. Goldman Sachs now expects another hike in October, joining ANZ, BofA, RBC and TD, while Citi, ING and SEB maintain September was the final hike [SRC241][SRC355].
- Mechanism
- If the terminal rate is repriced higher, long-duration equity multiples and rate-sensitive sectors face compression even as nominal growth holds.
- Wider market or sector impact
- A renewed US tightening cycle implies a stronger dollar, more pressure on non-US currencies, and less room for other central banks to ease [SRC335].
- Wider-impact evidence
- A unanimous 12-0 hike with a dot plot showing one more 2026 hike and two in 2027 resets the discount-rate path for every long-duration asset, and the immediate sell-side revisions show the market had underpriced the terminal rate.
- Countercase
- Citi, ING and SEB still hold that September was the final hike, and the median analyst forecast remains one additional 25bp move [SRC355].
- Next test
- Whether the 2-year note auction on September 22 clears inside the 4.625–4.749% band that would trigger an unscheduled 5-year reopening [SRC087].
Entities US Treasuries · rate-sensitive equities · US dollar · gold
Inspect evidence · 5 records
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SRC016 · Market reportingObserved 17 September 2026
1. The Federal Reserve raised interest rates by 25 bps for the first time since July 2023 in a unanimous 12-0 decision. In its statement, the Fed said Middle East conflicts and broader geopolitical developments contributed to the decision. The updated dot plot now points to one more 25 bps hike in 2026, with 12 of 18 officials expecting exactly one additional hike, 4 expecting two more hikes, and 2 expecting no further hikes. The Fed also projects 2 additional rate hikes in 2027, signaling policymakers expect rates to remain higher for longer. 2. President Trump is expected to meet with Gulf leaders on the sidelines of the U.N. General Assembly in New York next Tuesday to discuss the next phase of the Iran conflict, according to reports. The discussions are expected to focus on U.S. proposals for a postwar strategy, with leaders from the Gulf Cooperation Council (GCC), Saudi Arabia, the UAE, Qatar, Bahrain, Kuwait, and Oman, expected to participate. The meeting comes as the administration works on a broader postwar framework ahead of the Sept. 24 Trump–Xi summit, where regional security and AI are also expected to be discussed. 3. Generac $GNRC signed a long-term agreement to supply backup power generators for Amazon $AMZN data centers, with total payments under the deal potentially reaching $8B. Initial generator deliveries are expected to total roughly $2.4B across 2027 and 2028. As part of the agreement, Amazon received warrants to purchase up to 1.69M Generac shares at $200.93 each, with about 308K shares vesting immediately and the rest vesting in stages as Amazon’s payments move toward the $8B threshold. The warrants are exercisable through September 2033. The deal gives Generac a major long-term hyperscaler customer as AI data center growth continues driving demand for backup power and broader energy infrastructure. 4. Fed Chair Kevin Warsh said today’s rate hike removed a “dose of accommodation,” adding that the move shows the Fed is serious about restoring price stability. Warsh also said he believes the Fed can bring inflation back under control without damaging the labor market: “We don’t need to do harm to the job market to achieve our objective.” On AI, he said the Fed is closely monitoring developments but that decisions around AI’s risks and rewards belong to other policymakers, adding that the Fed’s AI task force is expected to report back by year-end. Meanwhile, White House official Desai called the Fed’s rate hike “rather unfortunate.” 5. Nebius $NBIS announced another ~20% price increase for on-demand H100, H200, B200, and B300 GPUs, effective October 1, just 4 months after raising prices by roughly 30%. The company also posted 5 first-place results in the latest MLPerf AI inference benchmarks, including the top full-rack performance on NVIDIA’s GB300 NVL72. Nebius was one of only 2 companies to submit results on NVIDIA’s next-generation Vera Rubin NVL72 platform, achieving 603K tokens/sec running DeepSeek R1 across 72 GPUs in the preview category. The results further reinforce Nebius’ infrastructure capabilities, engineering execution, and close partnership with NVIDIA. 6. The top 10 most active options today by contracts traded were $NVDA with 3.0M contracts, $TSLA with 2.4M contracts, $AAPL with 1.6M contracts, $SPCX with 1.2M contracts, $INTC with 1.0M contracts, $MU with 857K contracts, $META with 857K contracts, $AMZN with 854K contracts, $AMD with 743K contracts, and $HOOD with 403K contracts. 7. Trump administration officials are reportedly considering a meeting with major AI and tech executives on the sidelines of Xi Jinping’s Washington visit next week, though nothing has been finalized, according to CNN. OpenAI CEO Sam Altman and Nvidia $NVDA CEO Jensen Huang are among those expected to be in Washington for the state dinner and could potentially attend. The proposed discussion would focus on the future of AI and related risks, although Xi is not currently expected to participate. The meeting comes as the U.S. and China also prepare to discuss shared AI risks ahead of the September 24 T [...tail...] n 2011. 12. CoreWeave $CRWV signed a definitive 15-year anchor lease with Blockfusion for capacity at its Niagara Falls, New York AI data center campus. The former power plant is being converted into a high-density, liquid-cooled AI facility powered predominantly by hydroelectric energy. The agreement further expands CoreWeave’s long-term AI infrastructure footprint while leveraging low-cost, renewable power to support next-generation GPU deployments. WALL STREET IS THE GREATEST SHOW ON EARTH.
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SRC046 · Market reportingObserved 17 September 2026
Morgan Stanley Expects US Fed To Deliver A 25 Bp Rate Hike In March 2027, Adding To Its Forecast For A Rate Hike In December This Year
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SRC055 · Market reportingObserved 17 September 2026
STANDARD CHARTERED EXPECTS US FED TO DELIVER A 25 BP RATE HIKE IN DECEMBER 2026 VS PRIOR FORECAST OF NO POLICY CHANGE THIS YEAR
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SRC241 · @DeItaoneObserved 17 September 2026
GOLDMAN SACHS NOW EXPECTS ANOTHER FED HIKE IN OCTOBER Goldman Sachs has shifted its Fed call, now expecting another 25bp hike in October after Wednesday’s meeting proved more hawkish than anticipated. GS joins ANZ, BofA, RBC and TD Securities in expecting a follow-up hike. The bank highlighted the 16-2 split favoring another hike this year, elevated rate projections and Warsh’s repeated reference to removing a “dose of accommodation.”
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SRC355 · @DeItaoneObserved 17 September 2026
WALL STREET RETHINKS “ONE-AND-DONE” FED HIKE The Fed’s hawkish September meeting is pushing several banks to add another hike or reduce expected rate cuts, including Goldman Sachs, Morgan Stanley, NatWest, Rabobank, Swedbank and Commerzbank. The median analyst forecast still sees one additional 25bp hike, although views are split between October and December, while Citi, ING and SEB maintain that September was the final hike.