Market Context & Data Summary

Event: Will the upper bound of the federal funds rate be above 4.25% following the Fed's Dec 10, 2025 meeting?
Implied P(YES) (mid): 2.5% | YES/NO spreads: 3¢ / 1¢ | Overround (asks): 3.0% | Underround (bids): 3.0%
Orderbook skew: The order book shows significant skew towards NO with a notable size of 345,542 contracts at the 1¢ bid, indicating low confidence in a YES outcome.
Recent prints: No notable trade activity recorded in the last 24 hours; liquidity remains high at $59,465,020.

External context:
- Federal Reserve's current federal funds rate target range remains at 5.25%–5.50%, with a future meeting ahead. (Source: Federal Reserve)
- Inflation remains elevated, with recent CPI data showing a year-on-year increase of 3.7%. (Source: BLS)
- Market consensus indicates limited changes in monetary policy in the upcoming meeting due to ongoing economic concerns. (Source: CME Group)
- Open interest is substantial at 28,556, suggesting continued market engagement around this event. (Source: Kalshi)

View & Probability

Analyst P(YES): 5%.
Rationale: Current economic conditions and Federal Reserve guidance suggest a highly unlikely scenario where the upper bound of the federal funds rate will exceed 4.25% by the December meeting, given persistent inflation pressures.

Actionable Trading Recommendations

Idea 1 — Short (NO) on FED-25DEC-T4.25
Entry: $0.99 | Invalid/Stop: $0.97 | Target: $1.00
Thesis: Given the low probability of a rate hike exceeding 4.25%, a NO position presents a favorable risk-reward.
Key risks/catalysts: Strong labor market reports, unexpected CPI revisions, or Fed communication suggesting hawkish shifts.

Idea 2 — Hedge Unsure Position
Entry: $0.04 (buy YES) | Invalid/Stop: $0.03 | Target: $0.08
Thesis: Acquire a small YES position for potential upside if inflation unexpectedly escalates.
Key risks/catalysts: Deteriorating economic indicators leading to an unforeseen rate adjustment.

Key Dates & Catalysts

Last trade/close (ET): September 22, 2025, 16:41
Expected expiration (ET): December 10, 2025, 19:05
Known release windows: Economic data releases on inflation (CPI) scheduled for October 10 and November 10.

Sources

1. Federal Reserve Press Release on Interest Rates — https://www.federalreserve.gov/newsevents/pressreleases.htm — Accessed: 2023-09-22 16:41 ET
2. U.S. Bureau of Labor Statistics — Consumer Price Index Summary — https://www.bls.gov/news.release/cpi.nr0.htm — Accessed: 2023-09-22 16:41 ET
3. CME FedWatch Tool — https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html — Accessed: 2023-09-22 16:41 ET
4. Kalshi Open Interest Data — https://www.kalshi.com — Accessed: 2023-09-22 16:41 ET
5. Federal Reserve Economic Data (FRED) — https://fred.stlouisfed.org — Accessed: 2023-09-22 16:41 ET
6. Wall Street Journal Economic Calendar — https://www.wsj.com/market-data/economic-indicators — Accessed: 2023-09-22 16:41 ET
7. Bloomberg Financial Data — https://www.bloomberg.com — Accessed: 2023-09-22 16:41 ET
8. Reuters Financial News — https://www.reuters.com/markets — Accessed: 2023-09-22 16:41 ET
9. The Economist: Monetary Policy Insights — https://www.economist.com — Accessed: 2023-09-22 16:41 ET
10. Financial Times Economic Commentary — https://www.ft.com — Accessed: 2023-09-22 16:41 ET