As tomorrow's Federal Reserve meeting approaches, I feel increasingly sorry for Kevin Warsh. The market has already fully priced in a 25 basis point rate hike this week, so even if the hike occurs, it won't earn him any credit; this is just the most basic expectation. Warsh's dilemma is that the market has also fully priced in another 25 basis point rate hike in December, and two more in 2027. Warsh himself dislikes forward guidance; how can he meet such market expectations? Moreover, there wasn't a sufficient reason to continue raising rates in the first place. Tomorrow's Federal Reserve meeting will consist of two parts. At 2 PM Eastern Time, the FOMC statement and dot plot will be released. At that time, we will be able to confirm whether the Fed will raise interest rates (it will), and whether the dot plot will show one or two more rate hikes this year (it will show one). The press conference will be held at 2:30 PM Eastern Time, where the real drama will unfold. Reporters will repeatedly press Warsh: will the Fed continue to raise rates at the pace expected by the market? No matter how he answers, it will be difficult to satisfy the market, and the contradictions will erupt here. Compared to current market pricing expectations, the tone of this press conference will likely be dovish, which is why Warsh was on the defensive at the previous Fed meeting in July. My assessment of tomorrow's baseline scenario is: the outcome will repeat last time—the Fed will implement a rate hike, but its statement will be far less hawkish than the market expected. The market will again hotly debate the Fed's credibility, and the US Treasury yield curve will steepen. This is by no means the situation that US policymakers want to see. In my view, the US Treasury and the Fed have reached a new implicit consensus: the primary goal is to anchor long-term US Treasury yields, which is actually the core motivation behind this rate hike. The risk is that tomorrow's press conference could derail the entire plan. The chart above illustrates my projections for tomorrow's market. Top Left Quadrant: The Most Hawkish Scenario – The Fed implements a rate hike, accompanied by hawkish press conference rhetoric, confirming previous market expectations. This is the market's preferred outcome: a significant strengthening of the US dollar (two upward arrows), a slight decline in gold (one downward arrow), and a simultaneous drop in the S&P 500. However, this scenario is extremely unlikely. The Top Right Quadrant is more probable: the Fed completes the rate hike, but the press conference statement is more dovish than market expectations. The result would be a steepening of the US Treasury yield curve, a decline in the US dollar, and increases in gold and the S&P 500. The asset performance in the Bottom Left Quadrant is consistent with the Top Right Quadrant: if the Fed doesn't raise rates, its credibility will collapse, and even hawkish press conference rhetoric will be ineffective. Finally, the Bottom Right Quadrant: A broad dovish market, with a significant drop in the US dollar (two downward arrows) and a substantial increase in gold and the S&P 500. This scenario, like the Top Left Quadrant, is highly improbable. Core Conclusion: The market is highly likely to fall into the Top Right Quadrant, i.e., a dovish rate hike. For a market already harboring doubts about the Federal Reserve under Warsh's leadership, this result is insufficient.