Prediction markets and CME's Fedwatch tool are converging on a Federal Reserve hold in September, though none puts the odds above two-thirds. Kalshi gives a hold 65%, Polymarket 63%, and CME Fedwatch 55.6%, while a weak July jobs report has narrowed the gap with a hike scenario in just over a week. Inflation data could still move the numbers before the Fed votes Sept. 16.
Traders are leaning toward a Federal Reserve hold in September, but the size of that lean depends on which market you ask. Kalshi prices the hold at 65%, the highest reading among three widely watched trackers. Polymarket puts the same outcome at 63%. CME's Fedwatch tool trails at 55.6%, still leaving real room for a quarter-point rate hike.
Prediction markets put the hold trade in front
Polymarket's "Fed Decision in September?" market has pulled in more than $20.3 million in trading volume. No change trades at 63 cents on the dollar, a quarter-point increase sits at 36%, and a cut is priced at just 1.6%.
Kalshi's own September contract, with nearly $4.9 million in volume, tells a similar story: 65% for a hold, 33% for a 25-basis-point hike, and 2% for a cut. Between the two venues, more than $25 million has traded around the September decision, and both currently put a hold roughly 30 percentage points ahead of a hike.
CME Fedwatch keeps the hike alive
CME's Fedwatch tool, however, is not calling the race early. It assigns a 55.6% probability to no change on Sept. 16 and 44.4% to a quarter-point hike, based on pricing in 30-Day Federal Funds futures. That is the most hawkish of the three readings, and it has moved fast: on July 31, Fedwatch showed a 67% chance of a hike and just a 33% probability of no change — a reversal in just over a week.
A weak jobs report rewrote the board
The shift accelerated after the July employment report showed nonfarm payrolls falling by 23,000 while unemployment held at 4.1%. The Bureau of Labor Statistics released the report Aug. 7, giving traders fresh reason to doubt the Fed needs to raise borrowing costs again so soon.
At its July 28-29 meeting, the Fed left its target range at 3.50% to 3.75% unchanged. Its next meeting runs Sept. 15-16, with the policy announcement due Sept. 16.
Inflation data could flip the odds again
The next test for all three trackers is inflation. A hotter-than-expected reading could push those 33% to 44.4% hike probabilities higher fast, while a softer print would likely tilt even more money toward the hold. Traders have picked a side for now — the next inflation print gets the deciding vote.
Source: Bitcoin.com
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