Every Fed Official Backed September’s Hike. Most Want One More Before New Year’s
The Fed voted unanimously to raise rates in September, but the bigger question is what a surprise jobs report and an AI spending surge mean for the next meeting and for anyone holding SPY or TLT right now.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
All 18 Federal Reserve officials at the Sept. 15-16, 2026 meeting supported a quarter-percentage-point hike. Minutes released Oct. 7, 2026 show most expect another hike by year-end.
The formal 12-0 vote under Chairman Kevin Warsh counted only voting members. The minutes say “all participants supported raising the target range for the federal funds rate” to 3.75% to 4.00%.
Markets barely responded, and the SPDR S&P 500 ETF (NYSEARCA:SPY) slipped 0.23% to $777.26. The iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) fell 0.17% to $77.15. The question for fund holders is whether a second hike is already priced in.
Unanimous on the Hike, Divided on the Path
The forward guidance: “most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end.” “Many participants” called a higher path “prudent on risk-management grounds,” while “a number of participants” saw it “as necessary” based on forecasts. Insurance votes and forecast-based votes look identical on a dot plot, but insurance is easier to drop.
The Federal Reserve’s September projections showed 16 of 18 officials expecting at least one more hike in 2026. Of those, four Federal Reserve officials wanted two more, and two wanted none.
AI Spending Joins the Inflation Case
“Several participants commented that the scale and pace of the AI buildout had continued to surprise to the upside,” with some warning it could push demand past supply.
Building data centers uses power, electricians, and equipment faster than utilities and builders can add capacity (we featured seven of the suppliers behind that expansion, from power to cooling, in a report available here).
Officials also highlighted tariffs and energy, noting that “the longer energy prices remained elevated, the greater the risk” of broader price pressure. “Almost all participants” judged risks to the labor market “broadly balanced,” which removes the main argument against raising rates further.
Stocks and long bonds respond differently.
Index fund owners carry rate risk through valuations. A higher terminal rate raises the discount rate applied to future profits, reducing price-to-earnings multiples even when earnings hold steady.
Long-term Treasuries respond more to whether investors trust the Fed to control inflation. On Oct. 7, the 2-year yield fell to 4.77% from 4.79%, while the 30-year rose to 5.67% from 5.64%. TLT has lost 5.78% in the past month.
A Weak Jobs Report Arrived After the Vote
The Bureau of Labor Statistics reported just 29,000 jobs added in September and unemployment at 4.2%. Officials did not have that data when they met.
After the Federal Reserve minutes, the odds of an October hike are 18% to 19%. The same tracker put the cumulative odds of at least one hike by December at about 85%, including a 68.6% chance of exactly one hike, which suggests traders see a second move as unlikely. The Hill lists those meetings for Oct 27-28 and Dec 8-9.
Governor Michael Barr said, “further policy adjustments are likely to be needed.” President Trump wants lower rates and said: “You have a board that would like to see the country do badly, in my opinion.” Officials still voted unanimously for the hike despite that pressure.
What the Minutes Mean for SPY and TLT Holders
SPY has likely absorbed much of this news, because a December hike is mostly priced in, and the VIX was 15.01 on Oct 6. It is up 13.98% year to date despite rising yields.
TLT faces more pressure if the Fed’s worries about AI and energy prove right; long yields have room to climb. Six-month Treasury bills yield 4.28% and provide income without duration risk.
The Bureau of Labor Statistics releases the September consumer price index on Oct 14. If inflation runs hot and the 10-year yield closes above 5.31%, expect markets to price in two increases, which would likely pressure SPY before December.
Contact [email protected] for any questions or corrections.
Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
