Wednesday brings this year's 2nd to last installment of Fed policy announcements, and those announcements have certainly been ramping up in terms of significance (and "rates," for that matter).  While the Fed is widely expected to raise rates at the December meeting, the same cannot be said for the day after tomorrow.  In fact, expectations for a hike this week are almost nil, but traders may well glean clues from this week's announcement that help cement December's probabilities.

It also wouldn't be surprise to see markets become slightly more interested in the verbiage of the Fed announcement with inflation continuing to hold in a lower range for perhaps longer than they'd been anticipating.  "Lower" in this context refers to Core CPI at 1.7 for 5 months in a row, which is even worse than their "generally low" expectations for inflation for the next few years.  I'd guess "generally low" would align more with 1.9-2.0% in terms of year-over-year Core CPI, while 1.7-1.8 starts to raise questions about whether additional rate hikes are appropriate.  This could be something the Fed tries to do more to reconcile.

But the biggest Fed news this week will not come from the Fed.  Rather, it's Trump's expected announcement of the next Fed Chair that will make the biggest waves.  The Fed Chair is perhaps the most important person in the world when it comes to rate momentum over the medium term. 

While the Fed can't decide rates should be low when the economy says they must be high, they can certainly keep rates on the lower side of whatever an acceptable range might be for any given set of economic conditions.  They can also err on the higher side of that range, and it's largely up to the Fed chair to set the tone of that decision-making process.

One of Trump's potential Fed picks is more likely to err on the high side while the other is generally seen in the opposite light.  Markets have been quick enough to react to rumors on this topic that we may well assume a healthy reaction in either direction, depending on the choice.

From a technical standpoint, bond yields are attempting to hold a ceiling at 2.47%, hit in high volume on several occasions last week.  2.40% is the next logical pivot point on the way down, and we already look to be testing that with this morning's early trading.