The June 16 FOMC minutes confirmed what Chair Warsh telegraphed at the press conference: the committee is in no hurry to cut, and the dot plot has effectively priced in only one cut for 2026 with terminal settling at 3.78 percent. The 2-year Treasury has spent six sessions rejecting any meaningful move lower, and the September cut probability has fallen from 56 percent a month ago to 41 percent after the May CPI shock. That is the story underneath the rate decision: the front end is now anchoring expectations, not the long end, and the curve is the trade.

The Dot Plot Said It First

The June Summary of Economic Projections kept the year-end funds rate at 3.625 percent and the 2027 median at 3.375 percent. That is a quarter-point of easing next year and a quarter-point the year after. The committee effectively priced in one cut and removed the second. Markets read the same: the September cut probability is 41 percent, down from 56 percent a month ago, and the terminal rate implied by OIS is 3.78 percent, up 22 basis points since the May CPI print of 4.2 percent headline and 2.9 percent core. The committee is holding, not pausing. The language matters.

Wages Are the Tiebreaker

May average hourly earnings came in at 3.6 percent year over year, the slowest since June 2021, and the Sahm rule indicator is at 0.35, within 20 basis points of the 0.50 trigger. A nonfarm payroll print below 150,000 in June would push the indicator past the line. That is the asymmetric risk: the Fed has the hawks in the room willing to hold, but it does not have the data to justify a cut before September, and it cannot afford to be late if the labor market rolls over. The June payrolls on July 3 are the only number that can break the hold, and Warsh, on Wednesday, gets the first word.

The Curve Is the Trade

The 2s10s spread is at 22 basis points, the flattest since March 2023, and the 30-year auction cleared at 4.84 percent last week, the weakest tail of the year. Long duration is being repriced for terminal inflation around 2.5 percent, not 2.0 percent, and the long end is now the trade. The front end is range-bound until the June payrolls print, and the ECI report on July 31 is the swing factor for the September cut decision. The 2-year at 3.96 percent, the 10-year at 4.18 percent, and the 30-year at 4.84 percent are telling the Fed what the minutes confirmed.

What to Watch This Week

JOLTS on Tuesday. Warsh press conference Wednesday. University of Michigan inflation expectations on Friday. The Fed minutes Wednesday are the only data point that matters until the July payrolls. Until then, the front end is range-bound, the long end is the trade, and the Fed is the only story that matters. Watch the data. Watch the curve. The macro story has not finished writing itself.