CME Releases Probabilities for Future Fed Rate Decisions

Summary

According to CME’s ‘FedWatch’ on April 6, the market prices a 98.4% probability of the Federal Reserve holding interest rates steady in April, with a 1.6% chance of a 25 bps hike. For the June meeting, the probability of maintaining the current rate is 96.6%, with only a 1.8% chance of a 25 bps cut and a 1.5% chance of a 25 bps hike.CoinLive This reflects a significant shift over the past month, where expectations for rate cuts have nearly vanished.

Impact Analysis

So the market is finally admitting the pivot is off the table for the first half. The FedWatch tool shows near-certainty for a hold in April and June, with cut probabilities now negligible CoinLive. But focusing on the 98% hold probability misses the point. The real signal is in CME’s own record-breaking March volumes, especially in interest rate products marketscreener. This prolonged uncertainty about the timing of the next move, even if the direction is a hold, is a goldmine for them. Every data point forces repositioning and hedging, driving their ADV. The longer the Fed stays on hold, the more the market churns, and the more CME earns. It’s a pure play on continued rate path ambiguity. I see this as a tailwind for the stock heading into their Q1 earnings Barchart Option.