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Actionable Ideas
KXFEDDECISION-26DECNO16¢ edge
After the Sept 12-0 hike to 3.75-4.00%, the SEP end-2026 median is 4.1%. One 25bp hike puts the midpoint at 4.125% (matches median); a second to 4.25-4.50% overshoots to 4.375%. The CME strip (fact #43) shows ~89% cumulative probability of at least one hike by December and a 41.6% mass at 4.25-4.50% — i.e., the market broadly prices a path where October absorbs the single remaining hike. If Oct (~51% hike) is the meeting that delivers the one hike to median, December should mostly hold. The 66-67% December print is inconsistent with a one-hike-to-SEP-4.1% world combined with an October coinflip; the implied sum of Oct (0.51) + Dec (0.66) hike probabilities (~1.17 expected hikes) is also above what the SEP-consistent, ~89%-cumulative strip supports once you account for the 4.25-4.50% bucket being the two-hike scenario. Sell the December hike.
Market narrative
KXFEDDECISION-26DEC-H25 (Fed hikes 25bp at the Dec 9, 2026 meeting) trades 0.66/0.67, and the store's assumption #6 mirrors this (~66-67% modal 25bp hike, ~28% hold). At first glance the market matches the assumption exactly, so the headline bucket looks fairly priced. But the assumption itself is a single-meeting bucket, and it is inconsistent with the Fed's own projected path and with the October market.
Divergent belief
The December market prices a ~66-67% chance of a hike at the December meeting alone, but the SEP-implied path allows only ONE more 25bp hike to reach the 4.1% end-2026 median (#2), and October is a near coinflip that will more likely than not spend it (#4). A December hike therefore requires the Fed to hike at BOTH October and December — a hawkish overshoot to 4.25-4.50% that exceeds the SEP median by ~30bp. P(Dec hike) should be closer to P(Oct held) ~48% than to 66%. I believe 66-67% is 15-18 points too rich.
Reason
After the Sept 12-0 hike to 3.75-4.00%, the SEP end-2026 median is 4.1%. One 25bp hike puts the midpoint at 4.125% (matches median); a second to 4.25-4.50% overshoots to 4.375%. The CME strip (fact #43) shows ~89% cumulative probability of at least one hike by December and a 41.6% mass at 4.25-4.50% — i.e., the market broadly prices a path where October absorbs the single remaining hike. If Oct (~51% hike) is the meeting that delivers the one hike to median, December should mostly hold. The 66-67% December print is inconsistent with a one-hike-to-SEP-4.1% world combined with an October coinflip; the implied sum of Oct (0.51) + Dec (0.66) hike probabilities (~1.17 expected hikes) is also above what the SEP-consistent, ~89%-cumulative strip supports once you account for the 4.25-4.50% bucket being the two-hike scenario. Sell the December hike.
Catalyst
Oct 27-28, 2026 FOMC meeting and its statement/SEP signaling; then the interval between October and the Dec 9-10 meeting, including any Fed speaker guidance on whether the September median 4.1% remains the intended terminal 2026 level.
Falsification
Falsified if the Fed signals (or the SEP/dot plot is revised to imply) TWO more 2026 hikes to a 4.25-4.50% end-2026 median, or if October resolves hold and December still prices >70%, indicating the market has independent hawkish information I am not capturing. Also falsified if Dec H25 trades up on strong PCE/employment data pushing the terminal rate above 4.1%.
Catalyst forecast
If October hikes 25bp (51% scenario), December H25 should fall sharply toward ~30-40% as the one remaining hike is spent. If October holds (48% scenario), December H25 rises toward ~80%. Blended, fair value ≈ 45-50%, versus 66-67% today.
Counterparty
Traders buying Dec H25 at 0.66-0.67 who are extrapolating the September hike and the hawkish stance (#5 Warsh chair, #2 hawkish tightening) into a December move without netting out the single-hike SEP constraint and the intervening October meeting.
Weakest link
The argument assumes the SEP 4.1% median is a binding constraint on the number of 2026 hikes and that Oct/Dec hike events are not strongly positively correlated (e.g., a Fed that hikes in October may be more likely to hike again in December if it is deliberately front-loading). If hikes are positively correlated, P(Dec hike | Oct hike) is high and 66% could be justified. The direction also does not require two hikes being impossible — only that the market overweights a December move relative to the SEP-consistent path.
Confidence
0.50 – 0.68
EV edge (¢)
16.00
Return on capital
0.2400
Size
1500
Assumptions
Supporting facts
Assumptions
At the December 8-9, 2026 FOMC meeting, the modal outcome priced by Kalshi KXFEDDECISION-26DEC is a 25bp hike (to 4.00-4.25% if the Oct meeting held, or to 4.25-4.50% if Oct hiked), at roughly 66-67%; ~28% for a hold at the prevailing range; and only ~2-3% for a cut. This is the probability that the December meeting ITSELF delivers a 25bp hike (a single-meeting action bucket), not a cumulative probability.
fed · dec_2026_fomc_decision · hike_25bp_modal · kxfeddecision_26dec
Statement
At the December 8-9, 2026 FOMC meeting, the modal outcome priced by Kalshi KXFEDDECISION-26DEC is a 25bp hike (to 4.00-4.25% if the Oct meeting held, or to 4.25-4.50% if Oct hiked), at roughly 66-67%; ~28% for a hold at the prevailing range; and only ~2-3% for a cut. This is the probability that the December meeting ITSELF delivers a 25bp hike (a single-meeting action bucket), not a cumulative probability.
Reasoning
KXFEDDECISION-26DEC H25 trades 0.66/0.67 vs H0 0.27/0.28, H26 0.01/0.02, C25 0.01/0.02 (facts #40, #41). Correction to prior reasoning: because the Oct 27-28 meeting intervenes, H25 is the marginal Dec action, not "cumulative probability one hike has occurred by December." Cross-check against the CME Dec level distribution (#38: 3.75-4.00% 11.0%, 4.00-4.25% 47.4%, 4.25-4.50% 41.6%): the 41.6% at 4.25-4.50% requires hikes at BOTH Oct and Dec, and 11.0% at 3.75-4.00% requires holds at both, bracketing a Dec hike probability somewhere below the ~66% single-meeting read once you condition on the Oct state — but the Kalshi bucket is a direct single-meeting quote and is taken as the point estimate. A cut at Dec is priced near zero, and the >25bp hike bucket is ~2%. Supporting backdrop: September 2026 SEP median end-2026 = 4.1% implies one more hike in 2026 (#37), and the Sept 2026 decision was a 12-0 hike to 3.75-4.00% (#36).
Falsification
If KXFEDDECISION-26DEC pricing moves to show H0 > H25, or if the October meeting delivers a cut/clear hold and CME futures reprice the December meeting to a hold or cut modal, the assumption is falsified.
Kevin Warsh is the Chair of the Federal Reserve and of the FOMC as of 2026 (took office 2026-05-22); Jerome Powell is a Governor only.
fed · chair · kevin_warsh · 2026
Statement
Kevin Warsh is the Chair of the Federal Reserve and of the FOMC as of 2026 (took office 2026-05-22); Jerome Powell is a Governor only.
Reasoning
Federal Reserve Board bio and FOMC membership pages list Warsh as Chairman and Powell as Governor; the September 15-16, 2026 press conference transcript is titled "Chairman Warsh's Press Conference." This corrects the implicit Powell-chairs framing in existing store assumptions #1-#3.
Falsification
Contradicted if the Fed's official Board/FOMC pages list anyone other than Warsh as Chairman in 2026.
The most likely single outcome of the Oct 27-28, 2026 FOMC meeting is a 25bp hike to 4.00-4.25% (modal, ~51%), but a hold at 3.75-4.00% is nearly as likely (~48%); a cut is effectively ruled out (~1%).
fed · oct_2026_fomc_decision · hike_25bp_modal_but_near_coinflip · kxfeddecision_26oct_oct_27_28_2026
Statement
The most likely single outcome of the Oct 27-28, 2026 FOMC meeting is a 25bp hike to 4.00-4.25% (modal, ~51%), but a hold at 3.75-4.00% is nearly as likely (~48%); a cut is effectively ruled out (~1%).
Reasoning
The Fed hiked 25bp to 3.75-4.00% on 2026-09-16 by a unanimous 12-0 vote and its SEP median dot implies one more 25bp hike by end-2026; headline inflation remains elevated (CPI 3.4% y/y, PCE 3.7% y/y) though core CPI is decelerating (2.4%); the labor market is steady-but-softening (unemployment 4.1%, weak July vs. rebound August payrolls). Market pricing (CME 30-day futures, 2026-09-22) favors a hike 55.1% vs hold 44.9%, and KXFEDDECISION-26OCT on 2026-09-23 prices H25 at 0.51 vs H0 at 0.48. However, fresh September jobs (10-02) and CPI (10-14) data land before the meeting and can move the near-even split materially.
Falsification
Contradicted if the Fed cuts at the Oct 28 meeting, or if primary data released before the blackout (Sept jobs 10-02, Sept CPI 10-14) show a sharp disinflation/labor deterioration that pushes market-implied hike probability below ~20% or KXFEDDECISION-26OCT H0 above 0.75.
The market-implied probability of any Fed cut between 2026-02-26 and 2026-12-31 is under ~5%, reflected in KXRATECUT-26DEC31 trading at yes_bid 0.047 / yes_ask 0.052 (last 0.054) on 2026-09-23, while futures price ~0% cut odds at both remaining 2026 meetings.
market · implied_pricing · cut_probability_under_5pct · kxratecut_26dec31_window_feb_26_dec_31_2026
Statement
The market-implied probability of any Fed cut between 2026-02-26 and 2026-12-31 is under ~5%, reflected in KXRATECUT-26DEC31 trading at yes_bid 0.047 / yes_ask 0.052 (last 0.054) on 2026-09-23, while futures price ~0% cut odds at both remaining 2026 meetings.
Reasoning
The YES price is consistent only with a small tail-risk premium (e.g., an intermeeting emergency cut), not with material easing expectations; futures price ~89% odds of a hike by December.
Falsification
A sustained rise in KXRATECUT YES above ~0.15, or futures flipping to price meaningful cut probability at Oct 28 / Dec 9.
In 2026 the Fed's policy stance is hawkish/tightening — it hiked 25bp to 3.75-4.00% on 2026-09-16 (12-0), its SEP end-2026 median of 4.1% implies one more hike, and inflation (PCE 3.7% median projection) remains well above the 2% goal.
fed · policy_stance · hawkish_tightening · 2026
Statement
In 2026 the Fed's policy stance is hawkish/tightening — it hiked 25bp to 3.75-4.00% on 2026-09-16 (12-0), its SEP end-2026 median of 4.1% implies one more hike, and inflation (PCE 3.7% median projection) remains well above the 2% goal.
Reasoning
Six 2026 meetings, zero cuts, one hike; dissents shifted from "prefer cut" (Jan) to "prefer hike" (Jul); the Sep statement stressed price stability.
Falsification
A dovish policy signal (e.g., a cut, or a statement/SEP revision dropping the tightening bias) before end-2026.
The Fed will not cut its target federal funds rate at any 2026 FOMC meeting, so KXRATECUT-26DEC31 (cut between Feb 26 and Dec 31, 2026) resolves NO.
fed · rate_path · no_cut_in_2026 · kxratecut_26dec31_window_feb_26_dec_31_2026
Statement
The Fed will not cut its target federal funds rate at any 2026 FOMC meeting, so KXRATECUT-26DEC31 (cut between Feb 26 and Dec 31, 2026) resolves NO.
Reasoning
As of 2026-09-23 the Fed has delivered zero cuts in 2026 (holds in Jan, Mar, Apr, Jun, Jul) and instead hiked 25bp to 3.75-4.00% on 2026-09-16, with the SEP median implying another hike by end-2026. Only two 2026 meetings remain (Oct 27-28, Dec 8-9) and futures-implied probability of a cut at either is ~0%. The market itself trades at ~5 cents.
Falsification
A dovish pivot — e.g., a weak labor-market print or a sharp disinflation surprise leading the Fed to cut at the Oct 28 or Dec 9, 2026 meeting, or an intermeeting/emergency cut before Dec 31, 2026.
Facts
Kalshi KXFEDDECISION-26DEC (Dec 8-9, 2026 FOMC) implied pricing ~66% for a 25bp hike vs ~28% hold vs ~2-3% cut — consistent with stored live bucket prices (fact #40, H25 0.66/0.67, H0 0.27/0.28) and assumption #6. No material change vs the 2026-09-23 snapshot.
Caller-supplied confirmation, 2026-09-23
September 2026 SEP end-2026 median federal funds rate projection confirmed at 4.1% (not 3.6%) — the Dec 2025 SEP had shown 3.6% for end-2026; the Sept 2026 SEP revised it +50bp. Confirmation of already-stored facts #9/#15/#17; implies one further 25bp hike in 2026.
Caller-supplied confirmation, 2026-09-23
Structural note on KXFEDDECISION-26DEC resolution — the market resolves on the rate ACTION taken at the single December 8-9, 2026 FOMC meeting (25bp hike / hold / >25bp / 25bp cut / >25bp cut), NOT the cumulative level. Buckets are mutually exclusive. Because the Oct 27-28, 2026 meeting intervenes, the Dec H25 bucket's ~66% reflects the probability of a hike at Dec conditional on the state after Oct. With CME futures pricing Oct at 55.1% hike/44.9% hold (#39) and Dec levels at 11.0% / 47.4% / 41.6% for 3.75-4.00% / 4.00-4.25% / 4.25-4.50% (#38), the strip implies roughly 89% cumulative probability of at least one hike by December and a near-zero probability of a cut. Also note: the Dec 8-9 2026 meeting includes the quarterly SEP; the Oct 27-28 meeting does not.
caller
September 2026 SEP Table 1 federal funds rate medians are 2026 = 4.1%, 2027 = 4.1%, 2028 = 3.9%, 2029 = 3.6%, longer run = 3.2%; the 2026 central tendency band is 4.1-4.4%. June 2026 SEP medians were 2026 = 3.8%, 2027 = 3.6%, 2028 = 3.4%, longer run = 3.1%. With the current target range at 3.75-4.00% (midpoint 3.875%), the 4.1% end-2026 median implies one additional 25bp hike in 2026 (to 4.00-4.25%). Note: an earlier research pass mis-reported the September 2026 SEP end-2026 median as 3.6% by conflating the June comparison sub-row; the correct value is 4.1%. 2026-09-22: Fed speakers (Barkin "Why Hike?", Musalem, Collins) indicated a hawkish bias toward further hikes; Barkin cited July PCE 3.7%/core 3.3% and >60% of PCE index rising faster than 3% y/y.
user-provided research note
KXFEDDECISION-26DEC cumulative bucket prices imply ~66-67% probability of a 25bp hike at the December 2026 meeting, ~28% hold, ~2-3% cut.
Kalshi 2026-09-23
Kalshi KXFEDDECISION-26DEC (Dec 8-9 2026 FOMC) live pricing: H25 (hike 25bp) yes_bid 0.66 / yes_ask 0.67 last 0.66, H0 (maintain) yes_bid 0.27 / yes_ask 0.28 last 0.28, H26 (>25bp hike) 0.01/0.02, C25 (cut 25bp) 0.01/0.02, C26 (>25bp cut) 0.00/0.01; OI ~85k-92k per bucket.
Kalshi 2026-09-23
CME fed funds futures priced the October 27-28, 2026 meeting as 55.1% for a 25bp hike to 4.00-4.25% and 44.9% for no change at 3.75-4.00%.
CME FedWatch 2026-09-22
CME 30-Day Fed Funds futures priced the December 8-9, 2026 meeting rate levels as: 3.75-4.00% = 11.0%, 4.00-4.25% = 47.4%, 4.25-4.50% = 41.6%, and cut to 3.50-3.75% = ~0%.
CME FedWatch 2026-09-22
September 2026 SEP median federal funds rate end-2026 = 4.1% (up from 3.8% in June 2026), end-2027 = 4.1%, end-2028 = 3.9%, longer run = 3.2%; 18 participants submitted.
September 2026 SEP
FOMC raised the federal funds target range by 25bp to 3.75-4.00%, a 12-0 vote, effective 2026-09-17; IORB 3.90%, primary credit 4.00%, ON RRP 3.75%.
FOMC statement 2026-09-16
FOMC blackout period for the Oct 27-28, 2026 meeting begins 12:00 a.m. ET Saturday Oct 17, 2026 (second Saturday before a Tuesday meeting), ending 11:59 p.m. ET Oct 29, 2026.
Federal Reserve FOMC blackout rules
September 2026 CPI report scheduled for release (before the meeting).
BLS release schedule
September 2026 jobs report scheduled for release (before the Oct 27-28 meeting).
BLS release schedule
KXFEDDECISION-26OCT (event for the Oct 27-28, 2026 meeting) live prices: Hike 25bps (H25) last 0.51, bid 0.50/ask 0.51, OI ~345,647; Fed maintains rate (H0) last 0.48, bid 0.47/ask 0.48, OI ~449,749; Hike >25bps (H26) 0.01; Cut 25bps (C25) 0.01; Cut >25bps (C26) 0.01.
KXFEDDECISION-26OCT market prices
Market-implied odds (CME 30-day fed funds futures via Investing.com Fed Rate Monitor) for the Oct 28, 2026 decision: hold at 3.75-4.00% = 44.9%, hike 25bp to 4.00-4.25% = 55.1%; a cut is not a live outcome (~0%).
CME 30-day fed funds futures via Investing.com Fed Rate Monitor
2026-08-26 (data for July 2026, BEA): PCE price index +3.7% y/y, +0.2% m/m; core PCE +3.3% y/y.
BEA personal income and outlays
2026-09-11 (data for August 2026, BLS): All-items CPI +3.4% y/y (unchanged), +0.4% m/m; core CPI +2.4% y/y (lowest since March 2021), +0.3% m/m.
BLS CPI report
2026-09-04 (data for August 2026, BLS): Nonfarm payrolls +162,000 (vs ~56K consensus), following upward-revised +23K in July; unemployment rate 4.1% (June 4.2%, May 4.3%); average hourly earnings +3.1% y/y.
BLS employment situation
No primary-source forward guidance on the October meeting exists in the FOMC statement or implementation note; recent press conferences are video-only with no official text except the Chairman's opening statement.
FOMC statement/implementation note review
The September 15-16, 2026 FOMC press conference was chaired by Chairman Kevin Warsh (transcript title "Transcript of Chairman Warsh's Press Conference, September 16, 2026").
FOMC press conference transcript
September 2026 SEP medians: real GDP 2.3% (2026), unemployment 4.1% (2026), PCE inflation 3.7% (2026) and core PCE 3.6% (2026), both only reaching 2.0% by 2028-2029. End-2026 fed funds median dot ~4.1% implies one more 25bp hike (unconfirmed from raw dot table; ~16 of 18 participants at/above one more hike per prior store entry).
September 2026 SEP
FOMC raised the target range for the federal funds rate 25bp to 3.75-4.00% by a 12-0 vote, in support of a "timelier return" to the 2% goal; statement cites solid growth, strong productivity/capital investment, and elevated inflation. Effective 2026-09-17: IORB 3.90%, standing overnight repo 4.00%, ON RRP 3.75%, primary credit 4.00%.
FOMC statement and implementation note
Kevin Warsh took office as Chairman of the Federal Reserve Board of Governors (term to 2030-05-21) and chairs the FOMC; Jerome Powell is now only a Governor.
federalreserve.gov board bios and FOMC membership page
KXRATECUT-26DEC31 (Will the Fed cut rates before 2027? resolves YES if the Fed cuts the target range at least once between Feb 26 and Dec 31, 2026, including an intermeeting cut) is trading at yes_bid 0.047 / yes_ask 0.052, last price 0.054; open interest ~545,097 contracts.
Kalshi market data
EFFR = 3.88%; SOFR = 3.85%. EFFR stepped up from 3.63% to 3.88% on Sep 17 following the hike.
NY Fed reference rates / FRED
CME 30-day fed funds futures-derived probabilities: at the Dec 9, 2026 meeting, probability of range 3.75-4.00% (no change) = 11.0%, 4.00-4.25% = 47.4%, 4.25-4.50% = 41.6%; mass below 3.75-4.00% (i.e., a cut) ≈ 0%. Oct 28 meeting: 55.1% chance of a hike to 4.00-4.25%, 44.9% no change. Cumulative probability of at least one hike by December ≈ 89%.
CME futures via Investing.com Fed Rate Monitor, updated 2026-09-22
Only two 2026 FOMC meetings remain after September: Oct 27-28 and Dec 8-9, 2026.
Federal Reserve FOMC calendar
2026 FOMC decisions to date: held at 3.50-3.75% in Jan (10-2, Miran/Waller dissented for a cut), Mar (9-1), Apr (mixed dissents), Jun (12-0), Jul (9-3 with Hammack/Kashkari/Logan preferring a hike), then hiked to 3.75-4.00% in Sep (12-0). Zero cuts in 2026 to date; one hike.
Federal Reserve FOMC statements 2026
December 2025 SEP median end-2026 federal funds rate was 3.6%; the September 2026 SEP revised this up +50bp to 4.1%, reflecting a hawkish shift.
Federal Reserve, fomcprojtabl20251210.htm
September 2026 SEP other medians (end-2026): PCE inflation 3.7%, core PCE 3.4%, unemployment 4.1%, real GDP growth 2.3%.
Federal Reserve SEP 2026-09-16
September 2026 SEP median federal funds rate projections: end-2026 = 4.1% (central tendency 3.6-4.1%), end-2027 = 3.6%, end-2028 = 3.4%, longer run = 3.1%. End-2026 median implies one more 25bp hike in 2026; 16 of 18 participants projected at least one more hike.
Federal Reserve, fomcprojtabl20260916.pdf
FOMC implementation note raised IORB to 3.90% (effective Sep 17, 2026), primary credit rate to 4.00%, ON RRP offering rate 3.75%, standing overnight repo 4.00%.
Federal Reserve, monetary20260916a1.htm
FOMC raised the target federal funds rate range by 25bp to 3.75-4.00% (from 3.50-3.75%) by a unanimous 12-0 vote — the first rate hike since 2023. Statement cited "Inflation remains elevated" and that the action will "support a timelier return to the Committee's 2 percent goal."
Federal Reserve, monetary20260916a.htm
KXRATECUT-26DEC31 last price 0.054 (yes bid 0.047 / yes ask 0.052), open interest ~545k, total volume ~1.34M.
market snapshot
Fed funds futures-derived implied probability of a rate CUT at the Oct 28 or Dec 9, 2026 FOMC meetings is ~0.0%; market instead priced roughly 54% odds of a hike in October and ~78% of a fresh hike by December (cumulative ~90% higher by December).
centralbank.watch futures-derived data, CME FedWatch reporting
2026-08: CPI +3.4% y/y (BLS), unemployment ~4.1% in August, unchanged from July. Inflation elevated, labor market steady.
BLS
September 2026 SEP median federal funds rate projection is 4.1% for end-2026 and 4.1% for end-2027, implying one further 25bp hike in 2026; 16 of 18 dots at or above one more hike.
fomcprojtabl20260916.pdf
The Fed's remaining scheduled 2026 FOMC meetings after September 16 are October 27-28, 2026 and December 8-9, 2026.
Fed FOMC calendar (fomccalendars.htm)
As a result there have been ZERO federal funds rate cuts in 2026 to date (all 2026 FOMC actions were holds plus one hike).
derived from FOMC press releases
FOMC RAISED the target range by 0.25pp to 3.75-4.00% by a 12-0 vote — first hike since 2023. IORB raised to 3.90% and primary credit rate to 4.00%, both effective 2026-09-17.
monetary20260916a / monetary20260916a1
FOMC maintained the target range at 3.50-3.75% by a 9-3 vote; Hammack, Kashkari and Logan dissented preferring a 0.25pp HIKE. IORB held at 3.65%.
monetary20260729a / monetary20260729a1
FOMC maintained the target range at 3.50-3.75% by a 12-0 vote.
monetary20260617a
FOMC maintained the target range at 3.50-3.75%; Miran dissented preferring a cut.
monetary20260429a
FOMC maintained the target range at 3.50-3.75%; Miran dissented preferring a cut.
monetary20260318a
FOMC maintained the target federal funds rate range at 3.50-3.75% (vote 10-2; Miran and Waller dissented preferring a 0.25pp cut).
Fed press release monetary20260128a