CME Data Shows High Probability of Fed Rate Hikes in September and October

Summary

CME FedWatch data indicates a sharp rise in rate hike expectations, with a 63.4% probability of a 25bps increase in September and a cumulative 73.2% chance of hikes by October Zhitong. This shift follows a volatile week where September hike odds surged from 53% to over 80%, fueled by oil prices hitting $90/bbl and persistent energy inflation .

Impact Analysis

So, the market is finally waking up to the fact that the Fed isn’t done yet. We’ve seen a massive shift in CME data—September hike odds jumped from a coin-flip to over 80% in just a week before settling in the 60s Zhitong. This isn’t just noise; it’s a reaction to oil hitting $90 and the Middle East conflict reigniting energy inflation fears .

With 10Y yields anchored above 4.5% and real rates (TIPS) staying north of 2.3%, the ‘higher-for-longer’ narrative is back with a vengeance . This is a classic valuation trap for high-multiple tech and a direct headwind for gold. The July ‘pause’ was a head-fake; September is the real showdown . If you’re sitting on heavy growth exposure, you’re fighting both the Fed and the oil curve. I’d be leaning into energy as a hedge and trimming tech before the September volatility really kicks in. The consensus was way too early on the pivot, and the pain trade is now clearly higher rates.