APPLYING THE SECM–SEFSC AUGMENTED ACM MODEL III TO THE SEPTEMBER 16, 2026 FOMC DECISION: An Ex Ante Scenario Forecast, Consensus-Hike Test, and Post-Event Validation Protocol

Abstract

This pre-decision research note applies the verified SECM–SEFSC Augmented ACM Model III to the Federal Open Market Committee meeting of September 15–16, 2026. With a 25-basis-point increase in the federal funds target range heavily priced into markets, the analysis argues that the dominant market signal is likely to come from the Summary of Economic Projections, policy-statement language, and the Chair’s press conference rather than from the rate action alone. The paper combines the verified 2026Q2 SECM composition state—φ = 0.850947449, κ = 0.149052551, ρ = 3.986451553, and τ = −0.153170724—with the September 15 Treasury yield curve and the fiscal-term-premium mechanisms incorporated in Model III. A simplified expectations calculation shows that when markets assign approximately 92.4% probability to a 25-basis-point increase, the anticipated policy action is already about 23.1 basis points, leaving only a small direct action surprise if the consensus decision occurs. The analysis develops five conditional policy-and-communication scenarios with numerical reaction bands for Treasury yields, the 10s2s curve, the U.S. dollar, equities, and gold. Under a consensus increase accompanied by neutral-to-hawkish guidance, the model projects limited additional front-end repricing, a 10-year Treasury yield remaining near or above 5%, a positive 10s2s spread, relative dollar support, and a flat-to-negative equity response. A more dovish or “one-and-done” interpretation produces the contrasting pattern of bull steepening, dollar weakness, stronger gold, and a more favorable equity response. A predefined post-event scoring protocol is included so that the forecasts can be tested against realized market outcomes rather than adjusted retrospectively after the Federal Reserve decision.