According to data from CME's "Federal Reserve Watch", the probability of the Federal Reserve keeping interest rates unchanged at 3.75% -4.00% at its October meeting is 32.5%, and the probability of raising interest rates by 25 basis points is 67.5%; The probability of the Federal Reserve keeping interest rates unchanged at 3.75% -4.00% until December is 5.2%, the probability of a cumulative increase of 25 basis points is 38.0%, and the probability of a cumulative increase of 50 basis points is 56.8%.
AI interpretation: The market's pricing of the Fed's subsequent interest rate hike path has become highly convergent, clearly reflecting that tightening policies are still at the core. The high probability of interest rate hikes directly suppresses the market's illusion of a shift in monetary policy and strengthens the market consensus to maintain high interest rates. This pricing logic forces investors to reassess asset valuations, and the flow of funds will further concentrate on defensive assets. The Federal Reserve has successfully guided the market to accept a longer-term tightening environment through expectation management, and financial conditions will continue to tighten to combat inflationary pressures.
