Rate-hike bets surge to 34%! The U.S. Federal Reserve will finalize it in the early hours of Thursday, with Microsoft and Meta earnings reports released at the same time.

The Federal Reserve will announce its interest rate decision at 2:00 p.m. Eastern Time on July 29. Market bets on an unexpected rate hike jumped from 10.7% to about 30% within two weeks. Goldman Sachs described this week’s decision as “unusually uncertain.” JPMorgan says it sees no movement until 2027, while Renaissance Macro goes as far as saying hikes should happen now.
(Background recap: The Fed’s megaphone—its first major decision by Warsh, and whether to “do the opposite” of last year’s rate cuts.)
(Background addition: Meta is down more than 8% in pre-market trading! Q1 earnings beat expectations on revenue and profit, but concerns grow as AI spending surges.)

Table of Contents

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• Three takes on Wall Street
• South Korea’s stock market preview for today
• Bitcoin classified as a high-risk asset

Key takeaways

• The probability of a rate hike surged from 10.7% to 34.7% within two weeks; the current interest-rate range is 3.50% to 3.75%
• Goldman expects rate cuts in 2027, while JPMorgan expects a rate hike in 2027 Q3—two banks point in completely opposite directions
• South Korea’s KOSPI falls 8.02% today, triggering the 8th circuit breaker this year; Bitcoin also drops in sync to around $63,200

Two weeks ago, almost nobody believed the Federal Reserve would act in July. The CME FedWatch showed a rate-hike probability of only 10.7% on July 15; by July 22, it jumped to 34.7%. In just a week, it more than tripled. Even during trading last Thursday, it briefly approached 40%. As of July 28, the figure has fallen back to about one-third, but no one dares to say “it’s impossible.”

The Federal Reserve will release its interest rate decision at 2:00 p.m. Eastern Time on July 29, and hold a press conference at 2:30 p.m. That corresponds to Taiwan time of 2:00 a.m. and 2:30 a.m. on July 30. The current target range for the federal funds rate is 3.50% to 3.75%, and most traders still bet on no change.

What’s interesting is that the rise in rate-hike bets isn’t driven by hints from any official—if anything, it’s the opposite: nobody hinted. After newly appointed Fed chair Kevin Warsh took office, he pushed for communication reforms. He argued for reducing public remarks, stopping policy “talk” among committee members, and even considering canceling the post-FOMC press conference in favor of a rule-based framework.

At a congressional testimony on July 14, he announced the formation of a special task force to review communication practices. Members include Peter Fisher, Arminio Fraga, and Mervyn King. The cost of saying less—the market is paying for it now.

Three interpretations from Wall Street

Goldman Sachs’ chief U.S. economist David Mericle and his team described this week’s decision as “unusually uncertain.” The reasons are that Warsh’s style differs from that of his predecessor, his personal preferences are still unclear, divisions within the FOMC have widened, and on top of that, Iran’s situation has heated up further during the blackout period. By historical standards, both outcomes—either a rate hike or no change—would now count as surprises.

However, Goldman’s conclusion still leans toward no action. Softer June inflation data weakens the case for acting immediately, and this is a meeting without the Summary of Economic Projections (SEP). In such a context, a surprise rate hike is easy for the market to interpret as the start of the entire tightening cycle. David Mericle also pointed to a more fundamental issue: in research, moderate rate hikes are rarely truly effective, mainly because companies and consumers don’t focus on central bank decisions the way financial market participants do.

JPMorgan’s chief U.S. economist Michael Feroli is even more cautious. He believes that the framework and communication-mechanism reforms promoted by Warsh are unlikely to change the interest-rate path in the near term. JPMorgan expects the Federal Reserve to leave rates unchanged for the remainder of 2026; the next step would be a one-step rate hike in 2027 Q3. Softer CPI buys time for the FOMC argument, but the tightening bias has not been removed.

On the other side is Renaissance Macro chief economist Neil Dutta. In his July 22 client note, “Why not a hike now?,” he directly argues that the Fed should act now, citing stable employment, AI investment boosting demand, and elevated oil and services inflation. Tariff pressure is also still in place.

You have to pick the timing that goes against consensus. I think this might be one of those moments.

Neil Dutta added an even more pragmatic calculation: if you only have one month of inflation data that looks good, but you know the next two months will be ugly, then it’s better to do it now.

Worth noting: Goldman already canceled its two rate-cut forecasts for 2026 in June, switching to expectations of one rate cut each in June 2027 and December 2027. JPMorgan, meanwhile, expects a rate hike in 2027 Q3. The two banks are completely opposite on next year’s direction. When even the direction doesn’t line up, that in itself is the best footnote to this week’s uncertainty.

South Korea’s stock market preview for today

The rate decision is only half of this week’s test. The other half already exploded this morning across Asia.

On July 28 at 10:13 a.m., South Korea’s KOSPI triggered the 8th circuit breaker of the year. The index plunged 542.24 points, down 8.02% to 6,213.51 points, and trading across the entire market was suspended for 20 minutes. The trigger was selling pressure in U.S. semiconductor stocks. SK Hynix fell as much as 13% intraday, and Samsung Electronics dropped 10%. Both companies’ guidance came in below market expectations, and even though Samsung’s Q2 earnings hit a record high, it still couldn’t hold.

Over the past month, the SMH tracking 25 of the largest U.S. semiconductor companies is down 9.5%. Nvidia also closed down 2.2% last Friday. The core question behind this selloff is straightforward: when will the money poured into AI infrastructure start to pay back?

And on July 29, the earnings reports from Microsoft and Meta collide with the FOMC decision. Microsoft will report for Q4 of fiscal year 2026, and Meta will report for Q2. Apple and Amazon are scheduled for July 30.

Bitcoin classified as a high-risk asset

By the July 27 U.S. market close, things had already shown divergence. The Dow edged up 0.51% to close at 52,210.08; the S&P 500 was nearly flat at 7,413.18; and the Nasdaq Composite fell 0.18% to close at 24,932.08. WTI crude oil dropped nearly 7% that day to $83.15 per barrel—one of the reasons that rate-hike odds fell from nearly 40% to about one-third.

The crypto market is no exception. On July 28, Bitcoin fell about 2.7% to around $63,200. Global total crypto market capitalization retreated to $2.26 trillion, down 1.6% over 24 hours. When both macro and interest-rate pressures rise at the same time, Bitcoin’s correlation with stocks tends to strengthen.

Frequently asked questions

When will the Federal Reserve announce its July interest rate decision? What time is it in Taiwan?

The decision will be released at 2:00 p.m. Eastern Time on July 29, and the press conference will be held at 2:30 p.m. Taiwan time corresponds to 2:00 a.m. and 2:30 a.m. on July 30. At present, the target range for the federal funds rate is 3.50% to 3.75%.

What impact does a Federal Reserve rate hike have on Bitcoin?

A rate hike squeezes funding conditions for risk assets. On July 28, Bitcoin fell about 2.7% alongside selling pressure from Asian equities to around $63,200. Global crypto market value retreated to $2.26 trillion, showing that when macro pressure rises, Bitcoin’s linkage with the stock market becomes clearly stronger.