Fed Hike Odds for October Fell 45 Points in a Week. December's Odds Barely Moved.

Prediction market odds of a Federal Reserve rate increase at the October 28 meeting dropped from 63 percent to 18 percent in a single week. The move came after the Labor Department's September jobs report, according to Kalshi and Polymarket contracts tracked by DeFi Rate. The report gave traders the reason. Employers added just 29,000 jobs last month, well short of the roughly 90,000 that economists surveyed by Reuters had expected.

The jobs number behind the swing

The Bureau of Labor Statistics reported that nonfarm payrolls grew by 29,000 in September. The unemployment rate held at 4.2 percent, and the number of unemployed people reached 7.1 million. The agency's own language was blunt: both figures "changed little" from August. The bigger story was in the revisions. July's initially reported gain of 21,000 jobs is now a loss of 10,000. August's 162,000 gain shrank to 133,000. Together, the two months lost 60,000 jobs the economy had appeared to have. Average hourly earnings rose 5 cents to $37.81, up 3 percent over the year.

Why the Fed raised rates into a cooling market

The jobs report landed sixteen days after the Fed's own rate increase, not before it. On September 16, the Federal Open Market Committee raised its target range a quarter point, to 3.75 percent to 4 percent. It was the Fed's first increase in more than three years. The vote was 12-0, with no dissents. At the time, the committee described the labor market as stable, not weak and not cooling. Job gains had "kept pace with the workforce," it said, and the unemployment rate had "changed little."

“Inflation remains elevated. Today's policy action will support a timelier return to the Committee's 2 percent goal.”

A hiking plan already in motion

That is the tension sitting inside the Fed's own numbers now. Its September projections put the median year-end 2026 rate at 4.1 percent, up from 3.8 percent in June. That figure only works if the committee raises rates again before December 31. Fed Chair Kevin Warsh held a brief press conference after the September decision and offered limited forward guidance. He also did not submit a dot to the committee's projection chart, a step several Fed chairs before him skipped only in unusual circumstances. The committee cited "geopolitical developments" as a source of added uncertainty. Analysts have tied that language to energy prices connected to the war with Iran, though the statement itself names no country.

Who wins and who loses before December 9

A borrower with a variable-rate loan, a small business with a credit line, and a saver with a money-market account share one thing now. They are all watching the same calendar. The window is about two and a half months. Short-term rates stay where they are, at least through October 28. A saver keeps today's yield a little longer than the September data alone would have suggested. A small-business owner renewing a credit line gets a brief reprieve. Neither gets a guarantee past December 9, when prediction markets still favor a hike over a hold by roughly three to one.

The 18 percent and 73 percent figures are not a Fed forecast. They are prices traders were willing to pay on Kalshi and Polymarket contracts as of Friday night. Those prices already moved 45 points once, in a single week. What has not moved is the vote the Fed itself cast three weeks ago: 3.75 to 4 percent, unanimous. One more increase is already sketched into the committee's own chart.