Futures bid into a Fed that is expected to hike, not hold

US cash indices ended Tuesday lower across the board: the S&P 500 finished at 7,585.73, down 0.45%, the Nasdaq Composite fell 0.78% and the Dow 0.63%. That is last night's tape. The live read on the American day is futures, and they point sharply the other way — S&P 500 futures are trading at 7,674.25, up 1.12%, with Nasdaq 100 futures up 1.42%.

Europe is mid-session and firmer: the FTSE 100 is up 0.58%, the DAX 0.26%, the CAC 40 0.47% and the Euro Stoxx 50 0.50%. Asia closed higher, led by tech — the Kospi ended up 1.37%, Shanghai 0.71%, the Nikkei 225 0.69% and the Hang Seng 0.19%.

Everything today is scaffolding around 2pm ET. The Federal Reserve is expected to raise its target range by a quarter-point to 3.75–4.00%, which would be its first increase since 2023, and that outcome is close to fully priced. When a move is already in the price, the decision itself is not the risk — the projections and the guidance are. Two things have forced the Fed's hand: inflation that has stopped falling, and energy. Brent has surged more than 18% in a month on Middle East shipping and pipeline disruption, and at $107.51 it is still feeding straight through to headline prices.

The pre-market bid is harder to pin on one thing, and it is worth saying so rather than inventing a catalyst. Yields have come off a fraction — the 10-year at 4.981% is 1.5 basis points lower, the 5-year 2.5 basis points — and a pause in the yield grind matters disproportionately to long-duration growth names, whose valuations discount cash flows years out. Asian technology did the heavy lifting overnight, with Chinese AI-chip names rallying on Beijing's five-year electronics plan; our own calculations put the median Asian tech stock up 2.42% on the session.

The move also follows a genuinely bad Tuesday, and part of what looks like conviction this morning is simply reversal.

Positioning looks calm in equities and jumpy in rates. The VIX at 16.89 is down 1.8% and sits 52% below its 52-week high — no hedging panic into a live central bank decision. The MOVE index of rates volatility, by contrast, ended Tuesday 9.1% higher over five days: the uncertainty is about the path of policy, not about equities.

Yesterday's underlying tape was worse than the index moves suggest. Across PrimerIQ's US universe, 1,879 names rose against 3,884 that fell, with the average stock down 0.81%. Dispersion was the tell: energy gained 2.17% while consumer discretionary lost 1.75% — a market sorting on the oil price, not a broad de-risking. Gold is up 1.2% at $4,384.70 this morning, though it remains 21.5% below its 52-week high, and the dollar index is barely changed at 99.71.

The Census Bureau's advance retail sales report for August was scheduled for 08:30 ET today, five and a half hours before the Fed — deliberately awkward timing, since a firm consumer would reinforce the case for tightening and a soft one would complicate the guidance. The reference point is July's report, released on 14 August, which showed sales down 0.6% on the month, the weakest in over a year. Futures and Treasury yields have not moved materially through the last hour of the pre-market, which suggests the morning's data has not changed the arithmetic for 2pm.

That 2pm ET statement, with updated economic projections, is the day's event; the chair's press conference follows. Crude is lower into it, with WTI down 1.78% at $103.95 and Brent off 1.14%.

Nothing material has landed in the US pre-market, so yesterday's reactions are still the reference. The standouts were in radio-frequency chips: Skyworks rose 13.55% and Qorvo 9.34% as their pending merger moved toward completion, a rotation into handset-levered suppliers rather than AI names. On the other side, Enova fell 23.43% after pulling its regulatory filings and abandoning its planned acquisition of a bank holding company, and crypto-linked financials were hit hard — Coinbase down 10.10% and Circle 11.41%.