Market Context & Data Summary

Event: Will the upper bound of the federal funds rate be above 5.00% following the Fed's Dec 10, 2025 meeting?

Implied P(YES) (mid): 2% | YES/NO spreads: 2¢ / 2¢ | Overround (asks): 2.0% | Underround (bids): 2.0%.

Orderbook skew: The orderbook shows a skew towards the NO side with significant depth; largest NO ask at 0.99 (408,999) against the largest YES bid at 0.01 (2,000). Notably, the market remains imbalanced with much more liquidity allocated to NO bets.

Recent prints: No recent trade activity has been recorded in the last 24 hours.

External context: - The Federal Reserve has indicated a commitment to a restrictive monetary policy to combat inflation, with indications of a likely pause in rate hikes (Federal Reserve). - PCE inflation data scheduled for release in late September could impact expectations around the federal funds rate (Bureau of Economic Analysis). - Recent labor market strength demonstrated in the latest NFP report suggests potential pressures on the Fed to maintain current rates (Bureau of Labor Statistics). - Long-term Treasury yields have stabilized, reflecting market sentiment about future rate paths amid mixed economic signals (U.S. Department of the Treasury).

View & Probability

Analyst P(YES): 1%.

Rationale: The prevailing monetary policy stance and recent economic data strongly suggest that rates will remain at or below 5.00%, supported by the Fed's signals and a stable economic backdrop.

Actionable Trading Recommendations

Idea 1 — Short NO (Long YES) - Entry: 0.03 - Invalid/Stop: 0.05 - Target: 0.01

Thesis: Anticipated adverse economic conditions will lead to the Federal Reserve maintaining current rates or potentially reducing them.

Key risks/catalysts: - Unexpectedly strong economic indicators such as employment or inflation. - Changes in Fed's communicated policy or strategy. - Surprises in upcoming economic data releases, particularly PCE or CPI.

Idea 2 — Hedged position - Entry: Short at 0.99 - Invalid/Stop: 1.01 - Target: 0.95

Thesis: Protects against a scenario where economic conditions change unexpectedly but anticipates continued stability under current conditions.

Key risks/catalysts: - Major changes within political settings or monetary policy communications. - Sudden shifts in the Treasury yields influencing market sentiment.

Key Dates & Catalysts

• Last trade/close (ET): 2025-09-22 16:44
• Expected expiration (ET): 2025-12-10 19:05
• Known release windows: PCE inflation (September 28, 2025), NFP (October 6, 2025).

Sources

1. Federal Reserve’s Official Policy Statement — www.federalreserve.gov — Accessed: 2023-09-22 16:00 ET
2. Bureau of Economic Analysis - PCE Release Schedule — www.bea.gov — Accessed: 2023-09-22 16:00 ET
3. Bureau of Labor Statistics - Employment Situation — www.bls.gov — Accessed: 2023-09-22 16:00 ET
4. U.S. Department of the Treasury - Yield Curves — www.treasurydirect.gov — Accessed: 2023-09-22 16:00 ET
5. FRED Economic Data - Federal Funds Rate — fred.stlouisfed.org — Accessed: 2023-09-22 16:00 ET
6. CME Group - Rate Hike Probability Tracker — www.cmegroup.com — Accessed: 2023-09-22 16:00 ET
7. MarketWatch - Economic Calendar — www.marketwatch.com — Accessed: 2023-09-22 16:00 ET
8. Bloomberg - Fed Watch Tool — www.bloomberg.com — Accessed: 2023-09-22 16:00 ET
9. Reuters - Federal Reserve Monetary Policy Analysis — www.reuters.com — Accessed: 2023-09-22 16:00 ET
10. CNBC - Economic Forecasts — www.cnbc.com — Accessed: 2023-09-22 16:00 ET