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No third hike in 2026
by Terry Lee
On Oct 7th, the Sept FOMC meeting minutes provided details on where the Fed Funds rate is headed by year-end and the members’ reasoning:
Most FOMC members agree that the year-end Fed funds rate should be higher and the summary of economic projections (SEP) median projections puts it at 4.1%, which is +25 bps from the current rate, making the market’s ‘base case’ two hikes in 2026.
Fed fund futures and Polymarket traders largely agree that there will be another hike of 25 bps by year end. However, the Fed has cautioned that they remain “data-dependent.”
Using the basket strategy (more on that here), an interesting play looks to be: buying YES with equal shares on both outcomes (a) YES on 1 (25 bps) and (b) YES on 2 (50