CoinDesk
Traders see just a 58% probability that the Federal Reserve will raise its benchmark rate by 25 basis points on Sept. 16, according to the CME FedWatch Tool. That pricing is essentially unchanged from a week earlier, well before Friday's strong jobs report landed. Bitcoin fell and the two-year Treasury yield rose after the data, but the implied odds of a hike barely moved, leaving the surface-level market reaction looking outsized against the steadier futures curve.
Why it matters
The argument for a Fed rate hike later this month has gained traction since Friday's stellar jobs print, with social media and the analyst community leaning increasingly hawkish. The futures market is telling a different story. The 58% implied probability for a hike to a 3.75%–4% range mirrors where it sat right after Fed Governor Kevin Warsh's hawkish Jackson Hole speech, suggesting actual positioning hasn't moved much in either direction. Those with skin in the game are holding firm even as the rate-hike rhetoric intensifies.
Market impact
The disconnect between Friday's price action and the stable implied odds sets up Sept. 11 inflation data as the real swing factor for rate expectations. A softer CPI print could pull a September hike off the table entirely, while a hot reading would finally start moving FedWatch odds off the 58% mark. Bitcoin's drop and the two-year yield's pop read more sentiment-driven than futures-driven, which is why the volatility looks overdone in hindsight. The Fed rate decision lands Sept. 16.
Frequently asked questions
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What did Friday's jobs report show and how did it move rate expectations?
The print was strong, but traders are still pricing just a 58% probability of a 25bp Fed rate hike on Sept. 16, per the CME FedWatch Tool. That is essentially unchanged from a week earlier, well before the data landed.
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Why did Bitcoin fall and Treasury yields rise if hike odds barely moved?
Bitcoin dropped and the two-year Treasury yield rose after the data, but the implied odds of a hike barely shifted. The volatility looks outsized against the steadier futures curve, suggesting the move was sentiment-driven rather than futures-driven.
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How does the 58% probability compare to expectations before the jobs report?
The 58% implied probability for a hike to a 3.75%–4% range mirrors where it sat right after Fed Governor Kevin Warsh's hawkish Jackson Hole speech, before Friday's data release.
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What is the next major catalyst for Fed rate hike expectations?
The Sept. 11 inflation print is the next swing factor. A softer CPI reading could pull a September hike off the table entirely, while a hot reading would finally move FedWatch odds off the 58% mark.
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When is the Federal Reserve's next rate decision?
The Fed's next interest rate decision is scheduled for Sept. 16, with traders currently pricing a 25 basis point hike to a 3.75%–4% target range at 58% probability.
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