Markets are now pricing meaningful probability of a rate hike at the conclusion of this week's two-day FOMC meeting under new chairman Kevin Warsh, despite pre-blackout communications signaling no change. If the FOMC acts, it would mark a deliberate departure from the Bernanke-era forward-guidance doctrine, signaling that Warsh is willing to accept market volatility in exchange for policy agility.
For Armada's traditional desk, a surprise hike reshapes the short end immediately: SOFR and fed funds print higher overnight, repo rates on Treasuries and agencies reprice, and any fixed-rate term repos booked through month-end carry negative mark-to-market. Counterparties such as MMFs and hedge funds may pull or renegotiate open terms. Legal should confirm MRA documentation covers force-majeure rate dislocation clauses.