Fed Rate Hike Odds Jump on Prediction Markets
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- Polymarket saw its "no change" contract fall 8.9 percentage points to 73.25% over 24 hours, while the 25-basis-point hike contract jumped 9.7 points to 26.65%, with $5.78 million traded in the past day and $100.83 million overall.
- Myriad, operated by Decrypt's parent company Dastan, showed a near-identical split: 74% "no change" and 27% for a hike, with hike odds climbing about 8% in the past day.
- Fed-funds futures priced the probability of a rate increase at 37.6% to 38.8% Monday afternoon, signaling professional rate traders were pricing in higher hike odds than the retail-heavy prediction markets.
- A 25-basis-point hike would lift the Fed's current target range from 3.50%-3.75% to 3.75%-4.00%, reversing the easing trajectory markets had been expecting.
- The Federal Reserve held rates steady in June, warning that inflation remained elevated, while officials' median projection placed the year-end rate at 3.8% and June CPI cooled to 3.5% from 4.2% in May.
- The FOMC convenes for its two-day July meeting July 28, releasing its interest-rate decision at 2 p.m. ET on July 29.
Why it matters: After June inflation cooled to 3.5% and the Fed's own median dot-plot pointed to a 3.8% year-end rate, prediction markets are now pricing roughly 1-in-4 odds of an unexpected quarter-point hike—up nearly 10 points in 24 hours. Fed-funds futures put professional trader odds closer to 38%, putting rate-sensitive assets like Bitcoin and tech stocks on notice for a hawkish surprise at Tuesday's 2 p.m. decision.
