US Dollar (USD) is mixed and still trading just under its 200-DMA. 10-year Treasury yields testing the top-end of its 3.95%-4.20% range in place since September, and US equity futures are treading water, BBH FX analysts report.

Fed is expected to cut 25bps, markets eye SEP and vote split

"The FOMC is expected to trim the target range for the Fed funds rate by 25bps to 3.50-3.75% (90% priced in). The press release is likely to stress again that inflation 'remains somewhat elevated', and 'downside risks to employment rose in recent months'."

"The Fed could announce plans to start buying short-term T-bills given recent upward pressure on funding rates. This would be a liquidity management measure, not a change in the underlying stance of monetary policy. Instead, the FOMC vote split, Summary of Economic Projections (SEP) and Fed Chair Jay Powell’s press conference will steer the hawk-dove policy tilt."

"Markets are positioned for a hawkish cut as US two-year swap rates (3.20%) are slightly above the FOMC 2027/2028 funds rate projection (3.13%). That means the bar for a dovish surprise is low."