How To Trade Powell's Final Fed Decision Across Most Asset Classes

The FOMC is expected to reiterate its wait-and-see approach this week, leaving the funds rate unchanged with a strong consensus and likely only one dissent (Miran). The post-meeting statement should leave forward guidance unchanged while acknowledging better recent labor market data and higher inflation, noting that "inflation remains elevated" as the Iran war continues to cloud the economic outlook (see full preview here). 

The Path Under Warsh: With the DOJ dropping its investigation into Chair Powell, the path is clear for Kevin Warsh's Senate confirmation. While the bond market has interpreted the transition as mildly dovish for policy later this year, GIR is less confident in that view. Warsh and Powell have historically shared similar views on inflation and interest rate policy, and a new chair may have limited influence in pressing for cuts within a divided FOMC.