CME predicts 84.9% chance of 25 basis point rate cut by the Fed in December

Summary

According to CME’s FedWatch, there is an 84.9% probability of a 25 basis point rate cut by the Federal Reserve in December, with a 15.1% chance of rates remaining unchanged.Zhitong+ 2

Impact Analysis

So, the CME is signaling a strong likelihood of a Fed rate cut in December, with an 84.9% probability. This is a big shift from earlier expectations and aligns with dovish signals from Fed officials. The timing is interesting—right before the holiday season, which could be a strategic move to boost consumer spending and market confidence. The market’s already reacting: stocks and cryptocurrencies are up, and gold is seeing gains as the dollar weakens. But here’s the thing—while the market’s pricing in this cut, the real question is how much of this is already baked into asset prices. If the Fed doesn’t cut, or if the cut doesn’t meet expectations, we could see a sharp reversal. For now, it might be worth looking at sectors that benefit from lower rates, like tech and consumer discretionary, but keep an eye on the Fed’s language in December for any surprises.fidelity+ 3