October 2026 FOMC Audit: 3.75%–4.00% Hold (10–2 Vote), Two 25bp Hike Dissents & 4.1% SEP Median

Oct 28, 2026 FOMC held Fed Funds at 3.75%–4.00% (midpoint 3.875%) on a 10–2 vote: both dissenters (Cook, Hammack) favored a +25bp hike, growth wording stepped up from "solid" to "strong," and Sept minutes noted heavy AI bond issuance.

As of 2026.10.30 · Source: Federal Reserve FOMC Statements, SEP, Minutes, BEA Q3 GDP & U.S. Treasury Yield Curve · Derived ratios marked (Calc.).

1. Oct 28 Statement Diff vs. Sept 16 & The Two Hawkish Dissents

• Vote Shift (12–0 in Sept → 10–2 in Oct): Following September's +0.25pp hike to 3.75%–4.00%, October held at 3.75%–4.00%, with Lisa D. Cook and Beth M. Hammack dissenting for an additional +1/4pp (25bp) hike (zero cut dissents) [1][3].
• 3-Line Statement Diff:
  • Economic Activity: Upgraded one notch from "expanding at a solid pace" (Sept) to "expanding at a strong pace" (Oct) [1][3].
  • Policy Forward Sentence: Replaced September's "Today's policy action will support a timelier return to the Committee's 2 percent goal." with "The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to 2 percent." [1][3].
  • Productivity & CapEx: Kept verbatim: "Productivity growth is strong, and capital investment is robust." [1][3].
• Balance Sheet & Administered Rates (Unchanged): Roll over maturing Treasuries in full, reinvest agency MBS into T-bills, and maintain ample reserves: IORB 3.90%, ON RRP 3.75% ($160B daily limit), Standing Repo / Primary Credit 4.0% [2][4]. Reserve-management bill purchases remain paused [8]; Chair Warsh noted the Balance Sheet Task Force will report around early Q1 2027 [6][10].

2. BEA Q3 GDP (3.4%) & Sept FOMC Minutes on Hyperscaler AI Bond Issuance

• Macro CapEx Acceleration: Chair Warsh noted CapEx is at a historically high share of GDP led by high-tech investment (while noting wider credit spreads on some assets) [6]. On Oct 29, BEA reported Q3 2026 advance real GDP at 3.4% annualized (up from 2.2% in Q2; H1 revised 1.8% → 2.4%), led by information processing equipment (computers/peripherals) [11].
• Adverse Evidence From Sept Minutes (AI Debt Issuance): In the Sept FOMC minutes SOMA Desk report, market commentary cited heavy long-dated corporate bond issuance by cloud hyperscalers to fund AI infrastructure as widening credit spreads and pressuring long-end Treasury yields higher [8] (matching the debt/equity issuance we documented at GOOGL/META/AMZN in our Big Tech CapEx note).

3. Two Falsifiable Hypotheses: SEP Dot Plot (4.1%) & Treasury Yield Sensitivity

Left: FOMC SEP federal funds rate median projections in June 2026 vs. September 2026 (end-2026 and end-2027 both at 4.1%; unrounded 2026 median = 4.125%, vs. current midpoint 3.875%). Right: 1-day U.S. Treasury par yield change on Oct 28, 2026. Source: Federal Reserve SEP & U.S. Treasury [1][7][9].

• Hypothesis 1 (SEP Median Stays ≥4.1% While CapEx Is Robust): In the Sept 16 SEP, the end-2026 median Fed Funds projection rose from 3.8% (June) to 4.1% (12 of 18 dots at 4.125% = +25bp above the 3.875% current midpoint); end-2027 rose from 3.6% to 4.1% (2028: 3.9% vs. 3.4% in June; 2029: 3.6%; longer-run: 3.2% vs. 3.1%; 2026 GDP 2.3%, unemployment 4.1%, PCE 3.7%, Core PCE 3.4%) [7].
  • Dec 8–9 Falsification Rule: Falsified if the Dec statement keeps "capital investment is robust" yet the Dec SEP end-2027 median drops below 4.1% [5][7].
• Hypothesis 2 (Balance-Sheet Decisions vs. Rate-Decision Yield Hurdle):
  • Oct 27 → Oct 28 (FOMC Day): 2Y -0.03%p (4.70% → 4.67%), 10Y +0.06%p (4.99% → 5.05%), 30Y +0.07%p (5.30% → 5.37%) [9].
  • Oct 29 (Q3 GDP Day): 2Y 4.61%, 10Y 4.98% (-0.07%p), 30Y 5.32% (-0.05%p) [9][11].
  • Falsification Rule: Falsified if a future standalone balance-sheet announcement moves 10Y and 30Y yields by less than 0.06%p and 0.07%p respectively.

Takeaway & Next Dates to Check

• Calendar Checkpoints: (1) Nov 18, 2026 (3-week rule, Calc.): Oct FOMC minutes voter/dissent discussion [5]; (2) Dec 8–9, 2026 FOMC & SEP: end-2027 median dot vs. 4.1% [5][7]; (3) Early Q1 2027: Balance Sheet Task Force report [6][10].

Sources

1. Federal Reserve FOMC Statement (October 28, 2026), 2026.10.28.
2. Federal Reserve Implementation Note (October 28, 2026), 2026.10.28.
3. Federal Reserve FOMC Statement (September 16, 2026), 2026.09.16.
4. Federal Reserve Implementation Note (September 16, 2026), 2026.09.16.
5. Federal Reserve FOMC Meeting Calendars & Minutes Release Rules, accessed 2026.10.28.
6. Chair Warsh FOMC Press Conference Transcript (Preliminary PDF, pp. 1, 12, 14–15), 2026.10.28.
7. FOMC Summary of Economic Projections (September 16, 2026, Table 1 & Figure 2), 2026.09.16.
8. Minutes of the Federal Open Market Committee (September 15–16, 2026), released 2026.10.07.
9. U.S. Department of the Treasury: Daily Treasury Par Yield Curve Rates (October 2026), accessed 2026.10.30.
10. Federal Reserve Statistical Release H.4.1 (Factors Affecting Reserve Balances), 2026.10.29.
11. Bureau of Economic Analysis (BEA): Gross Domestic Product, 3rd Quarter 2026 (Advance Estimate PDF), 2026.10.29.