The Federal Reserve is expected to reduce its benchmark rate by a quarter percentage point on Wednesday, but don’t expect markets to take off in response. That’s because traders around Wall Street expect it to be a “hawkish cut.” JPMorgan traders, citing the bank’s head U.S. economist, explained that a hawkish Fed rate cut would entail two things Wednesday: The so-called dotplot — which indicates where individual Fed voting members see the overnight rate going — signals the central bank as a group expects to cut only once next year. That’s not exactly the low-rate regime some investors and President Donald Trump are clamoring for. Chairman Jerome Powell at his news conference signals concern still remains about inflation and doesn’t commit to any future monetary action. Wall Street appears to be prepping for such an event. The 10-year U.S. Treasury note yield has jumped around 14 basis points in December. The S & P 500, meanwhile, is flat month to date. US10Y 1M mountain U.S. 10-year yield in past month “The Fed is likely to go on an extended pause after cutting on Wed,” wrote Adam Crisafulli of Vital Knowledge, who also acknowledged the “hawkish cut’ chatter on trading floors in his note. Right now, Fed funds futures traders are pricing in the next rate reduction after Wednesday to not come until April, the CME Group’s FedWatch tool shows. However, this leaves a chance the stock market could be primed for an upside if the dotplot or Powell are not as conservative as they are expected to be. “The discussion has of course centered around a ‘hawkish’ cut – whatever that actually means. … It is reasonable to conclude that this outcome is largely discounted. That would presumably include no change to the 2026 dots or terminal rate, which is inline with Barclays Econ of only one cut next year,” Barclays’ trading desk wrote Tuesday. This, however, means “the market is not primed for a dovish outcome from this week’s meeting and should be a consideration for fast-money investors.” The Fed’s two-day policy meeting begins Tuesday.