The market attaches a 95% probability to a Fed funds rate cut of 25bp on Wednesday, to 3.5-3.75%. The market expects two additional 25bp rate cuts in 2026 in March and June. To appease inflation hawks on the FOMC, Powell is expected to lean hawkish at the news conference, but it may not even matter after this meeting, with the next Fed chair — National Economic Council Director Kevin Hassett is the frontrunner — likely to join the Fed as soon as February, rendering Powell essentially a lame duck for the last few months of his chairmanship. Hassett is a well-known dove, and his appointment would likely increase inflation expectations, which is why the 10yr TY has increased in recent weeks.