Here’s What Traders Were Doing Minutes Before the Rate Hike
Seconds before liftoff — perhaps the most talked-about, chewed-over, let’s-get-this-over-with decision in Federal Reserve history — the jokes were flying at Drexel Hamilton, a broker-dealer in lower Manhattan.
“Any more bets anyone wants to place?” one trader asked.
“I want 50!” another cried, referring to a 50 basis point increase — which no one, here or anywhere else, was expecting.
Up and down Wall Street, Wednesday’s Fed decision, so carefully choreographed for months, yielded either yucks or yawns.
At Drexel Hamilton, one trader unwrapped a sandwich just as the expected news hit at 2 p.m. — a 25 basis-point increase that brought to a close an epic period of near-zero interest rates and, with it, an interminable wait on Wall Street. He looked up. Then he took another bite.
“Now is when the work starts,” said Harry Smith, the firm’s vice president of agency trading. “You had a lot of customers who wanted to see the prints and now need to make a decision.”
The market’s reaction was as predictable as the Fed. Stocks rose, bonds fell.
The Fed made it easy by telegraphing its actions and moving slowly, said Steve Ivcic, Drexel Hamilton’s managing director of agency trading.
“When I started, we went from 5 percent to 20 percent,” Ivcic said. “It was a different environment where we had to guess and interpret what the Fed would do. This was an afterthought for them.”
Over on the fixed-income desk, Glenn Harvey said he left the Marine Corps in August after seven years and joined Drexel Hamilton.
“I’m the new guy,” he said. “It’s been an interesting day and I’m glad to have been a part of it, but it’s been nothing too intense.”
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