Fed Rate Decision and Dot Plot: Market Anticipation and Pre-Decision Trends

On December 10, 2025, Seeking Alpha published a report [1] highlighting market focus on the day’s FOMC rate decision and dot plot release. The federal funds rate is expected to be cut by 25 bps (to 3.50%-3.75%)—its third consecutive reduction from the July 2023-August 2024 cycle peak of 5.25%-5.50% [1]. Pre-decision market movements reflect a mix of anticipation and caution:

• Equities
  : The NASDAQ Composite gained 0.31% (tech sector momentum), while the Dow Jones Industrial declined 0.34% [0].
• Fixed Income
  : Treasury yields edged up, with the 10-year yield reaching 4.204% [2], signaling market caution ahead of the dot plot’s forward guidance.
• Precious Metals
  : Silver prices exceeded $60/oz for the first time [3][4], driven by a confluence of supply shortages (solar/electronics demand), industrial usage growth, and bets that lower rates reduce the opportunity cost of holding non-interest-bearing assets [3][4].

1. Silver’s surge is a dual driver phenomenon
   : Unlike many past precious metals rallies, silver’s 90% Y/Y increase stems from both monetary policy expectations (rate cuts) and real supply-demand fundamentals (industrial demand and shortages) [3][4].
2. Leadership uncertainty adds long-term volatility risk
   : Fed Chair Jerome Powell’s term ends in May, and potential replacements could shift monetary policy priorities, making the dot plot’s 2026 projections more critical for long-term market direction [1].
3. Data gaps amplify decision uncertainty
   : The government shutdown has delayed labor market and inflation data, reducing the Fed’s near-term policy inputs and increasing market sensitivity to the dot plot’s guidance [1].

• Risks
  :
  • A more hawkish dot plot (fewer 2026 rate cuts) or FOMC dissention could trigger short-term market volatility [1].
  • Silver prices could reverse if supply increases or industrial demand cools [3].
  • Delayed economic data may lead to more erratic Fed policy shifts post-decision [1].
• Opportunities
  :
  • A dovish dot plot could sustain momentum in tech equities (which showed pre-decision strength) and precious metals [0][3][4].
  • Long-term silver demand from renewable energy sectors may support prices even amid short-term volatility [3].

Pre-decision market sentiment leans toward a 25 bps rate cut (85% probability [4]), but the dot plot’s 2026 projections are the main catalyst for upcoming market moves. Decision-makers should monitor three critical post-announcement factors: the magnitude of the rate cut (if any), the dot plot’s forward guidance, and Fed Chair Powell’s press conference comments. Additionally, the ongoing government shutdown’s impact on economic data reliability and upcoming Fed leadership changes warrant long-term attention.