Fed Outlook: December Cut Priced In?

Prediction markets are pricing an 82% probability of a December rate cut, but recent Fed communications suggest more uncertainty than current prices reflect.

The sharp repricing over the past month has been driven by softer inflation data and labor market cooling. However, several Fed governors have emphasized data-dependency, suggesting the December decision remains genuinely uncertain.

At 82% probability, the cut scenario offers limited upside while the no-cut scenario could see significant gains if incoming data surprises hawkish. Risk-reward favors small contrarian positions at current levels.