At the risk of repeating too many words from yesterday's recap, we'll leave it at this: the Fed will hike by 50bps today. It won't be a surprise to the market. The Fed will also almost certainly announce a plan to reduce bond holdings with a baseline time frame of 3 months and "caps" that will eventually only allow reinvestments of proceeds that exceed $60bln in Treasuries and $35bln in MBS per month.
Of more concern is the way the Fed balances inflation fighting efforts against the prospect for economic slowdown. For those who are concerned about a recession, expect to be disappointed by the Fed's lack of concern. For those who are hoping today's comments have a lasting impact on bonds, expect the Fed to punt in such a way that places focus on incoming inflation data.
As far as Fed Funds Futures are concerned, although there is no major change seen for the near future meetings (June specifically), future meetings continue to ratchet to higher and higher rate expectations. Both September and Dec are pointing to the highest rates since they first opened for trading more than year ago. Translation: markets are expecting the Fed to be hawkish and expecting inflation issues to persist.