I heard the US Fed minutes come out early this morning. Why does the record of the last meeting, where rates were raised, matter now? How could my stocks move depending on the outcome?
2026-10-07
The minutes are "old news," but the market reads them again
What will be released at 3 a.m. (Korea time) this morning is the record of the September 15-16 meeting. Since then, payrolls came in at only 29,000, and the market has already shifted its rate expectations significantly. That is why some point out that the minutes may be treated as "stale" (Admiral Markets, 2026-10). Even so, the market is watching for one reason: it is the first chance to confirm how many Fed officials want further hikes and how strongly.
The bets the market has placed now
- About 20% odds of an October hike, about 81% odds of at least one hike by December, and a peak rate of about 4.50-4.75% in mid-2027 (Admiral Markets, as of 10/5)
- The September dot plot showed 12 members expecting one more hike this year and 4 expecting two, implying 4.00-4.25% at year-end (Fed dot plot tally, 2026-09)
- October hike odds fell from 70% to about 25% after remarks by New York Fed President Williams and Vice Chair Jefferson (Bloomberg, 2026-10-02)
This means Fed leadership has already signaled "not October." But Chair Warsh hinted at his press conference that he prefers "faster and more hikes," and some analysts say this may differ from the committee majority (MUFG, 2026-09). Dallas Fed President Logan said "several more hikes will likely be needed" (Bloomberg, 2026-10-02). The minutes will show whether the majority sided with the chair or the vice chair.
Three scenarios
| Scenario | What the minutes would show | Expected reaction | Assessment |
|---|---|---|---|
| Hawkish | Majority supports further hikes, some mention 50bp | 2-year yield jumps, dollar strengthens, Nasdaq and utilities give back gains | Medium-to-low probability |
| In line | Majority favors "gradual hikes," pace data-dependent | Swings right after release, then settles within the day | Most likely |
| Dovish | Several say the September hike was enough | Yields and dollar fall, gold and stocks supported | Medium-to-low probability |
The grounds for favoring the in-line scenario are that the September decision was unanimous at 12-0 and that the vice chair and the New York Fed president have already lowered market expectations. Past patterns also show that moves right after the minutes often fade within the same session (Admiral Markets, 2026-10).
Precedent for the hawkish scenario
The December 2021 minutes released in January 2022 are a prime example. When they showed that balance sheet reduction could start soon after rate hikes, the Dow immediately fell 300 points, the 10-year topped 1.70%, its highest since April 2021, and March hike odds jumped to 68.5% (City Index, 2022-01). This time, too, mentions of the balance sheet are the key variable. With the 10-year already near 5.3%, talk of quantitative tightening that directly hits long-term yields could hurt stocks more than the number of rate hikes.
What should investors do
- Don't change positions on the minutes alone. The minutes predate the jobs shock. 10/14 CPI is the real turning point for the October 27-28 meeting.
- The numbers to watch are the 2-year yield and December hike odds. If December odds top 90% after the minutes and the 2-year jumps too, the hawkish scenario is priced in. In that case, cut rate-sensitive names that rose on yesterday's yield retreat, such as XLU and XLRE, first.
- Check balance sheet language separately. If there is discussion of speeding up Treasury sales, long-term yields could rise further, so hold off on new purchases of long-duration Treasury ETFs (TLT).
- Be careful about chasing even if dovish signals appear. With only 25% of S&P 500 stocks above their 50-day line, whether a rate-relief rally spreads to the whole index is a separate question.