The Fed will announce its decision at 2 p.m. today, and almost everyone in the market is watching this moment. But in my view, the real suspense isn’t whether they’ll raise rates. Rate futures put the odds of holding steady at around 95%, so there’s not much suspense left there. Whether they raise rates has already been largely priced in. What’s really worth watching is the dot plot and the wording of the statement: if the distribution of projected rate paths in the dot plot is even slightly more hawkish than the market expects, the 2-year Treasury yield and the U.S. Dollar Index could jump intraday. The statement’s language on inflation, employment, and financial conditions could also reshape the market’s expectations for the next meeting.

Inflation at 3.7% is right there, well above target, and that’s why policymakers are reluctant to ease too soon. Rates are already at 3.75%-4.00%, and they just moved in September. The marginal cost of consecutive moves will only grow. How much room there is to go higher and how much the market can withstand are two different things: policymakers may still have one or two more moves available, but whether businesses can handle higher refinancing costs, whether borrowers can manage mortgage rates, and whether stock valuations and credit spreads can hold up are separate questions. In past cycles, we’ve often seen a combination of “a hawkish statement, but no move at that meeting.” Risk assets initially fell and then recovered. What really hit valuations was an upward revision to the following year’s rate path in the dot plot—not the basis-point move at that meeting.

On the chart, this area looks a bit like the right shoulder of a head-and-shoulders top, but no one should rush to a conclusion before the pattern takes shape. Whether the right shoulder holds depends on whether the neckline is decisively broken, and whether volume picks up on the rebound. Trading volume is interesting, though: weekend volume was only 30% of weekday levels, pointing to significantly thinner liquidity. In this kind of market, a small amount of buying can move prices a lot. Conversely, a few concentrated sell orders can magnify a decline, and once stop-loss orders start triggering in a chain reaction, prices can get swept along by the news. So after 2 p.m. today, don’t just focus on the three words “raise or hold.” First, see whether the statement’s wording is more surprising than expected, then check whether the dot plot’s median has changed, and finally see whether volume confirms the move. What do you think?