FOMC June held; July hike odds ~24.6%; September ~62.3%; rate-cut hopes dead; FOMC minutes released; July 29 meeting previewed; mortgage rates near 6.7% as hawkish pivot hits housing; Kalshi 54% odds of 2026 hike; Citi expects next move is a rate hike
Key Questions
What was the Fed's interest rate decision in June?
The Fed held rates steady at 3.50%-3.75% in June. This decision came amid mixed economic signals including a weak NFP report.
What are the current odds of a July rate hike?
July hike odds stand at approximately 24.6%, while September odds have risen to 62.3%. Prediction markets assign a 90% probability to a hold in July.
Why have rate-cut expectations faded?
Rate-cut hopes sparked a $1 trillion market rebound but collapsed after the NFP miss and hawkish commentary. FOMC minutes reinforced this shift by confirming a hawkish tone.
What do the latest FOMC minutes reveal?
Minutes show a few officials favored a June hike and now treat AI investment as an explicit inflation factor. The overall tone remains hawkish with limited dovish tilt.
How might the July 29 FOMC meeting unfold?
New previews indicate a hold remains the base case, though a rate hike is now openly discussed for the first time in over a year. Focus has shifted fully to this meeting after minutes absorption.
What is happening with mortgage rates?
Mortgage rates have climbed near 6.7% as the hawkish Fed pivot impacts housing. This reflects broader tightening expectations in bond markets.
What do prediction markets indicate for 2026 rate policy?
Kalshi traders price 54% odds of a 2026 rate hike, while Polymarket shows 79% probability of no cuts in 2026. Citi and BofA also anticipate the next move will be a hike.
Could upcoming CPI data change the outlook?
A benign CPI or PPI print next week may temporarily ease hike pressure. However, analysts note it will not alter the overall hawkish trajectory.
Fed held at 3.50%-3.75% in June. After June NFP miss (57K), July hike odds ~24.6%, September ~62.3% (up from 46% last week). Prediction market 90% hold July. Rate-cut hopes sparked $1 trillion rebound but now dead after NFP miss and Flanagan's 'Closing the Curtain on Rate Cuts' piece. FOMC minutes released yesterday confirm hawkish tone, with 'few' wanting a June hike and AI investment now an explicit inflation variable. New preview articles for July 29 FOMC meeting reinforce hold expectations. A new countdown piece explicitly frames a rate hike as a live possibility for the July 28-29 FOMC meeting, the first time in over a year. BofA calls for three rate hikes. House View predicts 50bps hikes H2 2026. Citi expects next move is a rate hike. Polymarket 79% no cuts in 2026. Waller ruled out cuts for fiscal deficits. ING sees hawkish minutes reinforcing dollar floor. RSM outlook sees hold at 3.5%-3.75% for rest of year. Minutes now fully absorbed; market focus on July 29 meeting. A new article (1DAo1uCd) adds nuance: scenario-based reaction function is the clearest articulation of Warsh's regime, and notes a slightly more dovish tilt compared to April. Mortgage rates near 6.7% as hawkish pivot hits housing. Kalshi traders now price 54% odds of a 2026 rate hike. A benign CPI/PPI print next week could temporarily ease rate hike pressure but won't change trajectory.