It's Fed Day. Here's what markets are eyeing as Powell gets ready to speak.

The Federal Reserve is set to announce a critical policy decision today — hike (possibly), pause (likely), or cut (probably not). It comes a day after inflation clocked in at 4.0% compared to a year ago, continuing the trend of prices falling steadily through 2023. 

Here's what to know.

This post first appeared in 10 Things Before the Opening Bell, a newsletter by Insider. 

1. The Fed has made 10 consecutive rate hikes leading up to today, making for one of its most aggressive tightening campaigns ever. 

Tuesday's cooler-than-expected inflation data is still double the Fed's 2% target, which suggests there could be more hawkishness ahead. 

Chairman Jerome Powell has repeatedly said that any decision will be data-driven, but markets have been eyeing a pause even before this week's cooler inflation reading, and investors think the odds of the Fed holding off today spiked even higher after the CPI report came out. 

CME's FedWatch Tool shows fed funds futures pricing implies markets think the odds are 95% that the central bank does not adjust interest rates today. Before the CPI release, that figure stood at about 75%. 

"Tuesday's Consumer Price Index suggests that inflation has been defeated," David Bahnsen, the founder and CIO of wealth manager The Bahnsen Group, said in an email following the report.

"Most of the inflation we are seeing is coming from housing, but it takes time for home price declines to show up in the CPI data, so today's 4% inflation rate is actually much closer to the 2% Federal Reserve target," he wrote.

But according to economist Mohamed El-Erian — a vocal Fed critic — skipping a rate hike today would be the Fed's worst possible move. 

It would mark yet another policy error, he wrote in a Financial Times op-ed, and a skip "could potentially be the least desirable" path forward. 

From the central bank's perspective, holding off on a hike today would give the rate-setting committee another six weeks of economic data to chew on before it decides its next move.

That's the view Fed Governor Christopher Waller and others have echoed.

Here's how El-Erian sees things: "An additional month of data is unlikely to significantly enhance the Fed's understanding of the effects of a policy tool that acts with variable lags."

Meanwhile, Wharton professor Jeremy Siegel suggested in a separate note that the Fed may actually be done with policy tightening altogether. 

Signs of a weakening labor market could prompt Powell and co. to end the inflation fight, which could potentially prevent millions of jobs being lost. 

"We're entering political season and there is already a ton of pressure not to create a deep recession," he said, nodding to next year's US presidential election. "I expect a shallow recession that the market has arguably already positioned for."

What are you expecting from the Fed meeting and Powell's press conference today? Email me at madams@insider.com.

2. US stock futures trade mixed early Wednesday, as investors await the Fed's critical policy decision. Here are the latest market moves. 

3. Earnings on deck: Lennar, Spar Group, and more, all reporting. 

4. Goldman Sachs just named 24 stocks to buy and ride higher right now. This batch of names, according to strategists, look poised to catch a rally through the end of the year. See the list.

5. Home prices could tumble in the second half of 2023. A new report from Capital Economics forecasted that high mortgages and a weakening economy could lower demand in the housing market. More here.

6. Goldman Sachs CEO David Solomon just warned of potential snags in the commercial real-estate sector. In his view, the property market looks vulnerable as things stand. Here's why.

7. If you ask Fundstrat's Tom Lee, he would say the US economy is actually expanding. He explained that, since he doesn't see a recession, the stock market could actually rally higher across all sectors because of investor FOMO. Read more.

8. Four Wall Street strategists explained why investors should proceed with caution on AI stocks. They say investors should be wary of latching onto the hype around the booming technology. Full details.

9. Warren Buffett's Japan bets have nearly tripled in value in less than three years. The Berkshire Hathaway chief put a $6 billion wager on five Japanese names in 2020. Thanks to soaring stock prices and additional share purchases, they're now worth roughly $17 billion.

10. Manchester United stock surged double-digits on Tuesday. Qatar's Sheikh Jassim and British billionaire Jim Ratcliffe both lodged bids to buy the soccer club from its American owners — and investors have cheered the big-money showdown. 

Curated by Max Adams in New York. Feedback or tips? Tweet (@maxradams) or email madams@insider.com

Edited by Hallam Bullock (@hallam_bullock) and Nathan Rennolds (@ncrennolds) in London.