Morgan Stanley joins Goldman Sachs in 11th-hour switch to forecasting a Fed hike

Morgan Stanley late Monday revised its forecast for the Federal Open Market Committee's upcoming decision, shifting from an expectation that rates would stay unchanged to a call for a rate hike. The move follows a similar 11th-hour change from Goldman Sachs, according to the report.

The significance lies less in any single bank's view than in the timing. When major dealers adjust expectations this close to a policy meeting, it suggests incoming data or official commentary have shifted the perceived balance of risks. Rate expectations feed directly into bond yields, the dollar, and equity valuations, so a broad rethink can move markets even before the Fed acts.

What to watch: whether other forecasters follow, how futures markets price the odds of a hike, and the Fed's own communication for signals about the pace and direction of policy. Investors should note that late calls can be wrong, and that market pricing, not any one institution's view, ultimately reflects the consensus.