Here's a scenario that trips up a lot of traders who only read headlines: a Fed official gives a speech that sounds hawkish, and rate hike odds for the next meeting fall right after it. That's exactly what happened today, and it's worth slowing down on, because it's a genuinely useful lesson in reading Fed communication correctly.
NY Fed President John Williams delivered a speech titled “Unwavering Dedication” at the University at Buffalo. He's not just any Fed official — as President of the New York Fed, he holds a permanent voting seat on the FOMC, unlike most regional Fed presidents, who rotate through voting years. When Williams talks about the path of rates, markets listen more closely than they do to most other Fed speakers.
What Williams actually said
Strip away the Buffalo Bills jokes and the "beef on weck" sign-off, and the substance of the speech was fairly direct. Williams described the balance of risks to the Fed's dual mandate as having shifted: employment risk has eased while inflation risk has increased, largely due to tariffs, Middle East-driven energy prices, and AI-investment-related demand. He put a number on where he sees inflation landing — around 3.5% this year, easing toward 2% by 2028 — and, most importantly for rate-watchers, said another rate increase “may be appropriate late this year” if the economy evolves as he expects.
That is, on its face, a hawkish signal. A sitting FOMC voter floating another hike before year-end is the kind of line that normally pushes rate-hike odds up, not down.
So why did CME FedWatch odds fall?
This is the part worth actually understanding, not just noting. Compare the two readings from today:
| CME FedWatch — Oct 27–28 FOMC | Before the speech | After the speech |
|---|---|---|
| Hike probability | 71.4% | 47.1% |
| Hold probability | 28.6% | 52.9% |
| Ease probability | 0% | 0% |
Hold became the more likely outcome for the very next meeting — the first time hike odds have dipped below 50% in this entire cascade. The explanation lies in a second part of Williams' remarks that got far less attention than the hawkish-sounding line: he also said there's “no need for urgency” and that the Fed has “time to gather more information” before its next move.
Put the two statements together and you get two separate signals bundled into one speech:
- A directional signal — Williams personally leans toward at least one more hike being appropriate before year-end.
- A timing signal — he sees no rush to make that move at the very next meeting specifically, preferring to let more data accumulate first.
The market, reading through the whole speech rather than just the headline-grabbing sentence, appears to have repriced around the timing signal — not the directional one. That's the actual lesson here: a hawkish-leaning Fed official is not automatically a hawkish signal for the next specific meeting. Those are two different questions, and conflating them is a common way traders misread Fedspeak.
Does this change the DXY Bias Score?
No — and this is exactly the kind of situation the SOG Capital DXY Bias Score is built to handle cleanly. The CME FedWatch component of the score is threshold-based: any hike probability above 30% scores a full +1, regardless of whether it's sitting at 47% or 88%. The logic is that once a hike is more likely than not being fully priced out, the marginal difference in conviction matters less than the direction itself.
47.1% still clears that 30% bar comfortably, so the score holds at +8, Bullish DXY — unchanged from before the speech. But the drop in conviction is still worth watching. This is the first CME reading below 50% this entire cycle, and if next week's October NFP print comes in soft, it could be the first real test of whether that threshold gets challenged from the other side.
The takeaway for your own trading
When a Fed speaker's remarks move the market in a way that seems to contradict the tone of the speech, the fix isn't to distrust the market reaction — it's to reread the speech for the sentence you skipped. Fed communication routinely bundles a directional lean with a timing qualifier, and the market is very good at separating the two even when headlines aren't. Reading only the hawkish-sounding pull-quote and trading off that alone would have had you positioned exactly backward from where CME FedWatch actually moved today.
This is precisely the kind of data-to-chart reasoning the upcoming SOG Capital YouTube series is built around — walking through moments exactly like this one, cycle by cycle, as the data lands.