Why investors fear a full-percentage-point Fed rate hike would ‘unnerve’ Wall Street

Some on Wall Street contend that investors are underestimating the likelihood that the Fed would deliver a surprise 100-basis-point interest-rate hike

"

the conclusion of its two-day policy meeting on Wednesday, given the downward pressure on both U.S. stocks and Treasuries on Tuesday.

"

Fed Chair Jerome Powell and other hawks on the Fed's policy-setting committee may have been persuaded.

"

that they must do more than simply stay the course as they struggle to control inflation, according to fed-funds futures traders,

"

who worry that last week's August consumer-price index print, coupled with the still-robust labour market, may have given that impression.

"

Many fear that by effectively eliminating the possibility of a "soft landing" for the U.S. economy, bringing the hammer down so hard would risk igniting chaos across markets.

"

Some on Wall Street contend that investors are underestimating the likelihood that the Fed would deliver a surprise 100-basis-point interest-rate hike

"

Others are more worried that failing to control markets today could lead to much worse outcomes in the future.

"