A rate hike is just the opening act; the dot plot is the main event

At this FOMC meeting, I believe the market really needs to focus on three words: What’s next? #每周来晒 and #FedRateHikeMeeting
Core CPI rose 0.3% month-over-month in August, while headline CPI reached 3.4% year-over-year. Combined with rising oil prices, inflationary pressure has once again become an issue the Federal Reserve cannot avoid. The market has now priced in nearly a 90% probability of a 25-basis-point rate hike in September, and some institutions have even begun to expect another hike later this year.
So, if the Federal Reserve raises rates as expected, the market may not necessarily plunge, because expectations have already been priced in. The real danger is that the dot plot suddenly becomes more hawkish: if more officials believe further rate hikes are still needed this year, the U.S. dollar and Treasury yields could continue to surge, forcing risk assets to endure a second round of pressure.
But if the dot plot is only adjusted moderately, and Powell emphasizes at the press conference that policy will remain data-dependent without pre-committing to the next move, the market may instead breathe a sigh of relief.
My strategy will be fairly simple: avoid taking oversized directional bets before the decision, then watch whether the U.S. dollar and 10-year Treasury yield break out in tandem afterward. If yields spike and then retreat, the potential for a rebound in BTC and U.S. stocks could actually open up.