Fed Stay-or-Cut: Market Hawks Win as Rate Cut Hopes Fade
The Federal Reserve is expected to hold rates steady in July (79¢ for no hike) with the market pricing zero rate cuts for all of 2026 at 76¢. Core CPI expectations remain sticky at 77% probability of rising more than 0.1% in June, reinforcing the 'higher for longer' narrative. Traders should watch the KXFEDDECISION series for July and September meetings.
Cross-market probability snapshot
Will CPI Core rise more than 0.1% in June?: Above 0.1%
81¢Will the rate of CPI inflation be above 3.6% for the year ending in June 2026?: Above 3.6%
96¢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
The Federal Reserve is expected to hold rates steady in July (79¢ for no hike) with the market pricing zero rate cuts for all of 2026 at 76¢.
- 02
Core CPI expectations remain sticky at 77% probability of rising more than 0.1% in June, reinforcing the 'higher for longer' narrative.
- 03
Traders should watch the KXFEDDECISION series for July and September meetings.
Full analysis
The Federal Reserve's path of least resistance remains a no-move July meeting, with KXFEDDECISION-26JUL- ("Will the Federal Reserve Hike rates by 0bps at their July 2026 meeting?") trading at 79¢ on massive volume of 357,419. The odds of a 25bps hike stand at just 20¢ (KXFEDDECISION-26JUL-, volume: 298,769), and a cut is virtually off the table at 1¢. Extending the horizon, KXRATECUTCOUNT-26DEC ("Will the Fed cut rates 0 times?") trades at 76¢ (volume: 7,761), confirming the market expects no easing this year. Sticky inflation is the likely culprit: KXCPICORE-26JUN-T0.1 ("Will CPI Core rise more than 0.1% in June?") shows a 77¢ probability (volume: 15,666), while KXCPIYOY-26JUN-T3.6 ("Will the rate of CPI inflation be above 3.6% for the year ending in June 2026?") sits at an eye-watering 97¢ (volume: 3,171). The yield curve reflects this hawkish repricing: the 10Y Treasury proxy (IEF) fell 0.18% to $93.53, while the long bond (TLT) dropped 0.27% to $84.31. For bond and equity traders, this suggests continued pressure on duration-sensitive assets and supports a 'higher for longer' positioning strategy. The KXFEDDECISION series for September (KXFEDDECISION-26SEP-) is the next key catalyst.
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