The Fed's dot plot will likely drive the kneejerk reaction
The Fed statement is at 2 pm ET, along with the projection materials. Yellen's press conference begins at 2:30 pm ET (1830 GMT).
There are too many moving parts in a Fed statement, projections and press conference to distill it in a preview in the hour before a Fed decision but if there's only one thing you watch, make it this.
The Fed will release the first update of its dot plot forecast since March. At the time, the Fed dots showed 14 of 17 forecasts above 0.50%.
The first Fed hike will be to a range 0.25% to 0.50% so those forecasts imply at least two rate hikes. That needs to come down, and rather dramatically.
The Fed has warned that its dot plots are merely a guide for were participants think rates should be, not a prediction about where they will be. But the market hasn't seemed to care and -- at least for an hour -- takes it as gospel.
What's the market expecting for the dot plots?
I think the market can live with a bit of goofy optimism, so there will surely be a few forecasts that look out of line. Back in 2012 five Fed members had predicted rates would be at 2.00% or higher this year. They've been wrong and they'll continue to be wrong.
What the market is looking for is the 'median' which is basically a quick look at where the dots generally converge. It's at 0.625% at the moment, which is two hikes. The Fed may wish to keep the possibility of a December hike on the table if it hikes in September.
That said, it would be a strong indication toward a Sept hike if there is no significant movement.
This is how Goldman Sachs envisions the new dot plot:
If you do one thing before the Fed, take a look at the most-recent projection pdf.
