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How to trade FOMC day
FOMC day has three reaction windows: the 2:00 PM ET statement (immediate 2Y move), the 2:00 PM SEP/dot plot release in projection meetings (terminal-rate repricing), and the 2:30 PM press conference (often reverses the initial move). The cleanest setup is to wait for the press conference to finish, then read the asset chain. The most expensive mistake is acting on the statement headline before the dots and Powell tone are priced.
- 2:00 PM statement - Diff vs prior. Watch for forward-guidance language changes.
- 2:00 PM SEP - Quarterly only. Terminal rate, growth/inflation revisions.
- 2:30 PM presser - Tone often reverses statement reaction.
- 3:00 PM close - The real signal - where 2Y and SPX settle.
The three windows
2:00 PM ET - Statement
- Statement language diff vs prior meeting
- Forward-guidance changes (most important)
- Vote dissents
2:00 PM ET - SEP (quarterly)
- Dot plot - median, distribution, hawkish/dovish skew
- Growth, inflation, unemployment revisions
- Terminal rate
2:30 PM ET - Press conference
- Powell's tone vs statement
- How he characterizes recent data
- Reaction-function clarity
How the move usually unfolds
- Statement drops → 2Y and USD move on initial read
- SEP drops → curve adjusts to new dots
- Powell speaks → tone often reverses the initial move
- Final 30 min → market settles on a coherent reading
The reading at 3:00 PM is more informative than any individual window.
The biggest trap
Trading the 2:00 PM headline before reading the SEP and hearing the press conference. The full picture takes 90 minutes to develop.