Fed Markets Price 70% December Rate Hike, Zero Cuts Through 2026
Fed decision markets show a 70% probability of a December 2026 rate hike and 89% probability of at least one hike by year-end. Rate cut expectations are near zero (0 cuts at 96¢). Recession risks are low for 2026 (5¢) but rise to 22¢ for 2027, signaling a potential pivot.
Cross-market probability snapshot
Will the Federal Reserve hike rates by December 31, 2026?: Before 2027
90¢Will there be a recession in 2027?: Yes
24¢Will the upper bound of the federal funds rate be above 4.00% following the Fed's Dec 9, 2026 meeting?: Above 4.00%
90¢Each row is a contract priced as a YES probability. Bars are tinted emerald in the >50% band, zinc otherwise. Hover or open in /markets for live orderbook data.
Key takeaways
- 01
Fed decision markets show a 70% probability of a December 2026 rate hike and 89% probability of at least one hike by year-end.
- 02
Rate cut expectations are near zero (0 cuts at 96¢).
- 03
Recession risks are low for 2026 (5¢) but rise to 22¢ for 2027, signaling a potential pivot.
Full analysis
The Federal Reserve decision markets are pricing a 70% probability of a 25bps rate HIKE at the December 2026 meeting (KXFEDDECISION-26DEC-), while only a 1% probability of a 25bps CUT. The KXFEDHIKE-2-26DEC31 market (will the Fed hike by Dec 31, 2026) is at 89¢, confirming the broad expectation of tightening. Rate cut count markets show KXRATECUTCOUNT-26DEC at 96¢ for zero cuts, strongly endorsing the no-cut narrative. The recession markets offer a contrasting view: KXRECSSNBER-26 at 5¢ probability of a 2026 recession, while KXRECSSNBER-27 climbs to 22¢ for a 2027 recession. The KXCPICOREYOY-26NOV-T market (core CPI above 2.9% for year ending November 2026) at 11¢ indicates inflation remains above target. Traders should watch the KXFED-26DEC-T4.00 market at 90¢ for the fed funds rate upper bound staying above 4%. Combined, these markets suggest the Fed is expected to maintain or raise rates through 2026 despite recession risks rising in 2027.
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