Wall Street is jittery hours before the highly anticipated Federal Open Market Committee (FOMC) meeting, with all major indices posting modest losses by midday in New York. While a Federal Reserve rate cut is considered a done deal, the market remains divided on the magnitude of the cut.
Current implied probabilities show a 60% chance of a 50-basis-point reduction, while a smaller 25-basis-point cut has lately gained traction, rising to 40% odds, as per CME FedWatch.
The growing expectation of a smaller cut has pushed Treasury yields higher across the curve, reflecting a shift in market sentiment.
Amid this uncertainty, the CBOE Volatility Index (VIX), often ...