CME FedWatch shows that the market’s probability of the Federal Reserve keeping rates unchanged in October has risen to 82.3%, with the probability of a 25-basis-point hike at about 17.7%. Pricing for December is even further out: only 17.3% for no change, while the probability of a cumulative 25-basis-point hike is 68.7%.
What drove the swing in expectations was the September nonfarm payrolls report released on October 2: only 29,000 jobs were added, far below the expected roughly 90,000; the unemployment rate rose from 4.1% to 4.2%; the combined figures for July and August were revised down by 60,000; and average hourly earnings rose just 0.1% month over month and 3.0% year over year, the weakest annual wage growth since 2021. Once the data was released, the probability of an October rate hike fell from about 28% to about 17%.
But there is a distinction that is easy to overlook: many economists believe this weakness mainly came from distorted seasonal adjustment — this year, the Labor Day holiday fell at the end of the month, which historically suppresses September readings and also leads to a downward revision for August. Evidence supporting this view is that initial jobless claims are still hovering near a 57-year low, with no sign of large-scale layoffs; the three-month average is around 51,000, roughly at the level consistent with full employment.
Officials’ messaging is also split: several key officials argue for "wait and see," while others still believe further rate hikes are needed. This means the 82.3% pricing reflects data noise, not confirmation of a trend.
For ordinary holders of $BTC , the actionable part is straightforward: October’s FOMC meeting and CPI data are the real turning points. As long as the pace of hikes does not accelerate again, the discount-rate pressure on risk assets will ease marginally.
Do you think October will stay on hold, or will inflation data push rate-hike expectations back up again?
#FederalReserveOctoberRateHoldProbabilityRisesTo82.3%
What drove the swing in expectations was the September nonfarm payrolls report released on October 2: only 29,000 jobs were added, far below the expected roughly 90,000; the unemployment rate rose from 4.1% to 4.2%; the combined figures for July and August were revised down by 60,000; and average hourly earnings rose just 0.1% month over month and 3.0% year over year, the weakest annual wage growth since 2021. Once the data was released, the probability of an October rate hike fell from about 28% to about 17%.
But there is a distinction that is easy to overlook: many economists believe this weakness mainly came from distorted seasonal adjustment — this year, the Labor Day holiday fell at the end of the month, which historically suppresses September readings and also leads to a downward revision for August. Evidence supporting this view is that initial jobless claims are still hovering near a 57-year low, with no sign of large-scale layoffs; the three-month average is around 51,000, roughly at the level consistent with full employment.
Officials’ messaging is also split: several key officials argue for "wait and see," while others still believe further rate hikes are needed. This means the 82.3% pricing reflects data noise, not confirmation of a trend.
For ordinary holders of $BTC , the actionable part is straightforward: October’s FOMC meeting and CPI data are the real turning points. As long as the pace of hikes does not accelerate again, the discount-rate pressure on risk assets will ease marginally.
Do you think October will stay on hold, or will inflation data push rate-hike expectations back up again?
#FederalReserveOctoberRateHoldProbabilityRisesTo82.3%