Rate Cuts or Hold? How Each Scenario Could Impact Your Trades

How the December 10 Fed Decision Could Shake Up the Futures You Trade

The final Federal Reserve meeting of 2025 is scheduled for December 9–10, with the rate decision and press conference taking place on Wednesday, December 10, at 2:00 p.m. ET and 2:30 p.m. ET respectively.[1]

The Fed has already cut interest rates twice this fall:

• Once in September 2025, and
• Again on October 29, 2025, bringing the federal funds rate down to a target range of 3.75%–4.00%.[2]

As of early December, a 25 basis point cut is widely expected. Multiple market polls and rate futures show an 80–90% probability of a December cut.[3][4]

Important: The scenarios below are not predictions.
They describe possible market behavior based on past Fed reactions.
StrongerTrades does not trade events — it trades proven market direction.

What Typically Happens Heading Into Fed Week

In the days before a major Fed announcement, markets often show familiar behavior driven by de-risking, hedging, and uncertainty.

1) Price Compression and Choppy Movement

Traders unwind positions and stay cautious. This can:

• Reduce directional trend quality
• Trigger fake breakouts
• Lower confidence in continuation patterns

2) Treasuries Become the Center of Attention

Short-term rate futures (TU, FV) price in policy expectations. Longer bonds (TY, US) react to growth inflation uncertainty. Small adjustments can trigger big moves once the announcement hits.

3) Volatility Builds Up

Options premium increases, spreads widen, and a market that looks calm can explode quickly the moment a headline releases.
This is why StrongerTrades waits for proof of momentum — not events.

The Fed Day Timeline: Why Timing Matters

Fed day price action is usually structured around these two time windows:

2:00 PM ET — Official Decision Release
Algorithms react instantly to the headline:

“Cut,” “No change,” or “50 bps cut”

Expect:

• Fast spikes
• Whipsaws
• No reliable follow-through (yet)

2:30 PM ET — Powell Press Conference
This is where the market discovers direction. Tone matters.

Expect:

• Narrative shift (hawkish vs dovish interpretation)
• Real directional conviction
• Trend formation (or trend rejection)

StrongerTrades doesn’t need a special Fed plan.
The same indicators that work every day simply wait for true momentum after the noise fades.

Three Key Scenarios and How Markets Often React

Below are behaviors that frequently occur during similar past events.
These are not trade instructions — they’re context that helps you interpret market movement.

Scenario 1: No Rate Cut (Hold at 3.75%–4.00%)

If the Fed surprises markets by not cutting, traders may react sharply to re-price expectations. Historically:

Short-Term Treasuries (TU, FV)

• Likely sell off (yields surge higher)

Equity Index Futures (ES/MES, NQ/MNQ, YM/MYM, RTY/M2K)

• Often see rapid downside pressure
• High-growth and small-cap contracts (NQ, RTY) tend to move more aggressively

StrongerTrades doesn’t assume direction or prepare a defensive strategy.
The system continues waiting for validated movement. If the initial shock becomes a trend, the signals will reflect it. If it fails, it’s filtered out — just like any other day.

Scenario 2: 25 bps Cut (Base Case)

A standard, expected cut usually results in a “relief reaction,” but tone matters. There are two ways this often unfolds:

A “Dovish” Cut

Fed signals comfort easing further →
Risk-on reaction: NQ, RTY often outperform
Yields fall, so TY/US rally strongly

A “Hawkish” Cut

Fed warns inflation risk remains →
Mixed moves with weak follow-through
Bonds react more than equities

Scenario 3: 50 bps Cut (Surprise)

A large cut can mean two different messages:

In both versions:
Treasuries usually rally hard (yields drop)

StrongerTrades doesn’t try to guess which interpretation wins.
It simply waits for the market to show which one takes control.

Quick Market Reaction Cheat Sheet

Sources & References

[1] Federal Reserve Board – Meeting Calendars (2025).
Published by The Federal Reserve.
https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

[2] Federal Reserve – “Federal Reserve Issues FOMC Statement.”
Published Oct. 29, 2025.
https://www.federalreserve.gov/newsevents/pressreleases/monetary20251029a.htm

[3] Reuters – “Economists Double Down on December Fed Cut.”
Published Dec. 4, 2025.
https://www.reuters.com/world/us/economists-double-down-december-fed-cut-despite-policymaker-divide-2025-12-04/

[4] CME Group – FedWatch Tool (Rate Probability).
Accessed Dec. 2025.
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html