Been watching the Kalshi markets for the next Fed rate hike. The FED.MAR24.HIKE contract is sitting around 70% chance of a hike, which seems a bit high given the recent CPI print. I'm wondering if the market is overpricing the hawkish sentiment here or if I'm missing something in the forward guidance that's driving this. If we get another soft inflation reading before the March meeting, that 70% could come down hard.
It's interesting how quickly the sentiment can shift. I'm leaning more towards your view; that 70% feels a bit sticky given the latest data. Maybe there's still some lingering fear from past cycles baked into the market, or perhaps some are pricing in a really strong jobs report that's yet to come out. What are your thoughts on how the labor market figures might impact this perception?
I'm with you, that 70% feels a bit steep, especially after the latest CPI. Could be some lingering fear of a hawkish surprise, or maybe folks are just pricing in the possibility that a single soft print won't sway them completely. It'll be interesting to see how it moves with the next data points.
That's an interesting point about the CPI print. I've been looking at that contract too and wondering the same. Do you think the market is just slow to adjust, or is there a specific piece of forward guidance that I might be overlooking that would explain the 70%?