Recent earnings have come in strong: “With 69% of S&P 500 companies having reported, 70% are beating 1Q earnings…and 54% are beating revenue estimates,” JPMorgan Chase analyst Dubravko Lakos-Bujas told clients in a recent note.

More broadly, investors are holding their breath for Wednesday’s interest rate decision from the U.S. Federal Reserve. President Trump has been loudly arguing that Fed Chair Jerome Powell should cut the rate, but the smoke signals from the Eccles Building suggest that the central bank will keep rates on hold. As always, it will be his commentary and guidance that will move markets on the day. 

Here’s a snapshot of today’s action:

• The 30-Day Fed Funds futures market gave a greater than 98% chance of the Fed keeping rates on hold at 4.25% to 4.50%.
• The S&P 500 closed up 1.47% on Friday but S&P futures were down 0.77% preopening in New York. (The S&P remains down 3.31% YTD.)
• All the major Asian markets were up this morning with the exception of China, where the CSI 300 slipped 0.12%. 
• The Stoxx Europe 600 was up marginally in early trading.
• The U.K.’S FTSE 100 was closed to observe the Labour Day holiday.
• Palantir will release its earnings after the bell today.

Although the Fed is not expected to move interest rates—the Fedwatch dashboard has “hold” on a 98%-plus chance—Powell faces an unenviable puzzle: Recent earnings and macro data have come in strong. Coupled with President Trump’s tariff regime, that suggests inflation may move upward, which would require the Fed to raise rates. However, sentiment and survey data from the private sector remain gloomy—and the tariffs themselves haven’t hit the real world yet. That suggests an economic slowdown, which would require the Fed to lower rates.

Absent a clear direction either way, the Fed is likely to hold. The most recent public statement from a member of the Federal Open Markets Committee came from Beth M. Hammack, president of the Cleveland Fed, who underlined that sentiment. “I think we need to be patient. We want to make sure we’re moving in the right direction, rather than moving quickly in the wrong direction,” she said, according to a Goldman Sachs research note seen by Fortune. 

Goldman’s chief economist, Jan Hatzius, thinks the Fed might be somewhat biased toward cuts rather than raises. “While the FOMC appears to be setting a higher bar for rate cuts than during the 2019 trade war, we do not think that high inflation would deter it from cutting if the unemployment rate begins to trend higher as the tariff shock hits the economy,” he told investors in a recent note.

“The Fed’s main problem is inflation uncertainty. There is little confidence in what future trade taxes will be. Overnight, U.S. President Trump declared a 100% tax on imported movies—Mr Bean is seemingly a national security threat,” UBS analyst Paul Donovan said this morning.