CME FedWatch: 70.1% Probability of No Rate Hike in July

According to CME FedWatch, the probability that the Fed will hold rates steady in July is 70.1%, while the probability of a cumulative 25-basis-point hike is 29.9%. By September, the probability of holding rates steady is 37.2%, the probability of a cumulative 25-basis-point hike is 48.8%, and the probability of a cumulative 50-basis-point hike is 14.1%. AI Analysis: The market’s pricing overwhelmingly favors a hold on rates in the near term, reflecting stability in the current monetary policy path. Diverging interest rate expectations reveal market tensions between inflation and growth concerns, and this pricing structure directly constrains expectations for near-term policy shifts. Investors are adjusting asset allocations based on these probability distributions to navigate liquidity pressures stemming from a prolonged high-rate environment. This data underscores strong market consensus that the Fed will maintain its restrictive stance, reinforcing the narrative that interest rates will remain elevated for an extended period.