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Well now, let’s see. What could the financial markets be thinking about this week? The Yankees’trade for Juan Soto? Who will be the next Speaker of the House when Republicans force Mike Johnson out? The link between Mexican avocados and the country’s drug cartels?

Maybe. Must maybe. All eyes will be on the Federal Reserve meeting on December 13.

On the one hand, there’s very little uncertainty out what the Fed’s interest-rate-setting body, the Open Market Committee, will do on interest rates. Everyone expects the Fed to hold rates steady at the current 5.25% to 5.50% level. The CME FedWatch Tool, which calculates the odds of a Fed move from prices in the Fed Funds Futures market, put the odds of “no change” at 97.1% on Friday, December 8.

Om the other hand, the updated projections on interest rates and inflation for 2024 in the Fed’s Dot Plot, the first update since September, could hold surprises big enough to upend market confidence that the Fed will begin cutting interest rates as early as its March 20, 2024 meeting.

In September, the Dot Plot median projection called for Core Personal Consumption Expenditure inflation, the Feds preferred inflation number, of 2.5% at the end of 2024. That was identical to the June Dot Plot projection of 2.5%.

In October the actual core PCE rose at an annual rate of 3.5%, down from a 3.7% annual rate in September.

Looking at the September Dot Plot you could conclude that the Fed might think it still has work to do and would need to hold interest rates steady, rather than cut them early (or even midway through) 2024.

Is that what the Fed thinks? The financial markets will be looking at the Fed’s Dot Plot projection for the benchmark interest rate at the end of 2024 to see.

In September, the Dot Plot projection saw end of 2024 the Fed Funds interest rates at 4.6%. That was even with the projection in June of 4.6%.

The markets are pricing in 100 to 125 basis points of interest rate cuts in 2024. That would take the end of the year rate down to 4.00%-4.25% or 4.25%-4.50% from the current 5.25%-5.50% range.

The market is, at this moment, well ahead of the Fed’s consensus projection for an end of 2024 benchmark rate of 4.6%.

So the big, exciting uncertainty for Wednesday’s Fed meeting is whether the December Dot Plot projection for end of 2024 interest rates will close that gap and show the Fed moving to something closer to the current Wall Street consensus. Or not.