📈 Economy
✦ AI
CME FedWatch shows ~95% market probability for another rate hike by year-end 2026. The Fed last raised rates on September 15-16, 2026 unanimously (12-0) to 3.75-4.00%; CME implies ~69% for +25bps at the October 27-28 meeting. Supporting factors: Core PCE August 2026 expected >3.8% YoY, EUR/USD at 1.1382 (Sept 27, 2026) confirms monetary policy divergence from Europe. Small discount from CME figure (95% → 88%) to account for tail risks: possible recession signals or sudden inflation drop. CME FedWatch implies ~95% for a year-end hike.
📈 Economy
✦ AI
Polymarket sees 88.8% probability of zero rate cuts in 2026 (as of September 2026). The current Fed funds rate is 3.50–3.75% — unchanged for months. The Fed faces a stagflation dilemma: weak labor market (July NFP −23,000, ADP August 38,000) alongside elevated inflation (August CPI forecast >3.2%). Rate cuts would be politically risky with elevated inflation; rate hikes economically dangerous with shrinking payrolls. The existing Cassandra forecast for the September meeting (no change) is already priced in; the same logic applies to November (5th/6th) and December (15th/16th).
📈 Economy
✦ AI
Kalshi prices a 25 basis-point rate hike at the December FOMC meeting at ~74–75%, while Polymarket sits at ~73% (as of October 13, 2026). The broader picture: US inflation remains stubbornly above the 2% target (September CPI consensus: 3.6–3.7% YoY per Nowflation/Kalshi), with rate cuts for the remainder of 2026 priced out at 97% probability (Polymarket). The October FOMC meeting (October 28) is priced as a hold with 84% probability — December remains the Fed's most likely action window. Weak September labor data collapsed October hike odds from ~64% to ~17%; December re-prices that tightening impulse. Polymarket/Kalshi: ~73–75%.
📈 Economy
✦ AI
Monetary policy trajectory: September hike to 3.75–4.00% at 78–81% probability (Polymarket/defirate.com aggregated); October hold per existing Cassandra prediction. For a December hike: US headline CPI August 2026 well above 3.0% YoY (BLS, Sept 11), hawkish Fed Chair Kevin Warsh (Jackson Hole August 2026: 'readiness for further tightening'), 10-year yield near 5% as a market signal of persistent inflation. The existing Cassandra prediction ('Fed funds rate at least 4.00–4.25% by Dec 31, 2026, at least two further 25bp hikes') explicitly implies this December step as hike #2 after September. Counterpoint: the November FOMC (Nov 4) could alternatively be the timing, with December then holding.