Fed: July hike priced at 23¢, 0 cuts by year-end at 78¢ as inflation persists
Fed rate markets show strong hawkish sentiment: July hike at 23¢, cut at 1¢. Year-end: 78% chance of 0 cuts, 16% for 1 cut. Gas price markets above $3.90 confirm inflation persistence, supporting the 'no easing' view.
Key takeaways
- 01
Fed rate markets show strong hawkish sentiment: July hike at 23¢, cut at 1¢.
- 02
Year-end: 78% chance of 0 cuts, 16% for 1 cut.
- 03
Gas price markets above $3.90 confirm inflation persistence, supporting the 'no easing' view.
Full analysis
The July 2026 FOMC meeting dominates fed rate markets. The probability of a 25bps hike is 23¢, while a 25bps cut is just 1¢. The base case (0bps change) is priced at 74¢. Rate cut trajectory: 0 cuts by year-end 2026 is at 78¢, 1 cut at 16¢, 2 cuts at 5¢, 3 cuts at 2¢. The 'Fed cuts rates before 2027' contract is at 19¢. Key insight: the market overwhelmingly expects the Fed to hold or hike, not cut. The {KXRATECUTCOUNT-26DEC} series shows near-zero probability of 3 or more cuts. For traders, the 74¢ on 'no change' for July is the most liquid single meeting contract. The steep drop from 16¢ (1 cut) to 5¢ (2 cuts) suggests priced-in risk for only one modest easing by December 2026. The {KXFEDDECISION-26JUL-} series is the liquid benchmark. Gas price markets ({KXAAAGASW-26JUN22-3.}) show 98¢ probability of gas above $3.90 - persistent inflation supports the hawkish Fed view.
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