Markets Bet the Farm on a Fed Cut — Now Everyone's Bracing for the Aftershock

Source: CryptoNewsNet Original Title: Markets Bet the Farm on a Fed Cut — Now Everyone’s Bracing for the Aftershock Original Link: Odds of the U.S. Federal Reserve trimming the federal funds rate at the Federal Open Market Committee (FOMC) jumped on Tuesday, signaling that futures traders and prediction markets have all but planted a flag on a quarter-point cut as the likely outcome.

Market Goes All-In on a Quarter-Point Trim

Most of Wall Street’s major indexes flashed green on Tuesday, joined by gold and silver gleaming a bit brighter and the crypto market tagging along for the ride.

CME Fedwatch data added even more color to Tuesday’s rate-cut frenzy, showing traders have all but called the play before the FOMC even huddles. The tool pinned an 89.6% probability on a cut to the 350–375 basis-point range, leaving only a faint 10.4% chance that officials hold the current 375–400 bps target.

In other words, futures markets aren’t just leaning toward a trim — they’re practically treating it as a done deal. Prediction market traders, never shy about calling the Fed’s shot early, are even more emphatic. As of 12:30 p.m. Eastern time on Dec. 9, the platform priced a 25 bps cut at a commanding 96%, effectively treating it as the default outcome.

The market’s bet shows a deeper 50 bps trim barely registers at 1%, while “no change” limps in at 4%. As for a surprise hike? Traders have shoved that outcome into the rounding-error column at less than 1%. Other prediction market traders are just as convinced the Fed is reaching for the scissors.

The U.S. predictions marketplace pegs the odds of a 25 bps trim at 95%, nudging up a point, while the “hold steady” crowd has dwindled to 5%. Anything deeper than a standard cut barely flickers on the board at under 1%. Add it up, and prediction markets’ order books alongside CME’s futures paint a picture of inevitability — the quarter-point cut is the market’s baseline, with every other outcome drifting in as little more than background noise.

Moreover, on Tuesday, White House economic advisor Kevin Hassett argued that there is “plenty of room” for the Federal Reserve to keep trimming interest rates, echoing President Trump’s push for looser monetary policy. Speaking at the WSJ CEO Council, Hassett signaled he’d welcome cuts beyond the anticipated 25 basis points from the Fed’s ongoing meeting, so long as the economic data keeps playing along.

At this point, the only one still acting like there’s any suspense is the calendar. Traders have drafted the script, futures markets are humming the theme music, and prediction platforms are already handing out popcorn. But higher asset prices ahead of the announcement can flip into a sell-the-news event faster than you can say “dot plot,” so a little caution wouldn’t hurt.

FAQ

• What rate move are markets expecting from the Federal Reserve? Traders are overwhelmingly pricing in a 25 bps cut at the December FOMC meeting.
• How are prediction markets reacting to the potential rate cut? Platforms show near-consensus odds favoring the trim.
• What does CME FedWatch indicate about the Fed’s next decision? FedWatch data places the probability of a cut near certainty, with minimal odds for a hold.
• Could higher asset prices trigger a sell-the-news reaction? Yes, elevated prices ahead of the announcement raise the risk of a quick pullback once the decision arrives.