US STOCKS: Late Equity Roundup: Testing Lows As Crude Extends Rally

• +40,000 TYV6 107 calls from 9-10 just prior to the FOMC annc.
• Calls trade 8 last with underlying continuing to pare first half gains: TYZ6 106-04 last (+6) vs. 106-11 high.

The updated Dot Plot shows another 25bp hike is expected by 12 of 18 FOMC members (to a midpoint of 4.125%) with 4 seeing a third hike to 4.375%, and just two seeing rates remaining at their now-current midpoint of 3.875%. It's in line with the analyst consensus, though the distribution of dots looks very solid on a second hike to come by year-end. 

• Additionally, we take note that the profile is higher-for-longer than consensus had expected. It's particularly of note that 14 members see rates at the end of 2027 above where they sit today, and with the 4 at 4.375% in 2026 growing to 8 in 2027, several members may be eyeing another hike by end-2026 then another one extending into 2027.
• Furthermore, the 2028 median of 3.9% is well above the consensus 3.4%, though the median is only loosely held and distribution here is a little wider, 9 members see rates at or above current levels by end-2028.
• And the longer-run median nudged up to 3.2%, with 8 dots above 3.25% and 8 below it, a modest surprise that it rose but it's been headed in that direction for several meetings. Note also that the 4 longer-run dots above 3.375% seen in June has now grown to 7 members, which is suggestive of a significant drift higher in estimates of neutral and thereby underpinning the higher-for-longer outlook.

• Some two-way greenback price action in the immediate aftermath of the decision, with initial modest dollar weakness countered swiftly by a surge to session highs as the market assesses the higher for longer dot plot.
• USDJPY trades as highs as 155.34 from 154.86 lows, but remains shy of the overnight peak at 155.49.
• Dollar strength is a little cleaner for the likes of EURUSD and GBPUSD which extend to session lows, and cable notably extending intra-day declines to 0.4%. The pair has breached both support at the 50-day EMA, currently at 1.3492, and 1.3475, a trendline drawn from the Jun 24 low. A confirmed break of both support points would highlight a stronger bear threat and open retracement levels of 1.3408 and 1.3345.