The contract did not budge when hot services-price data printed at 10 a.m. It rose at 11:24 a.m. on the session's heaviest volume, including a single 20,000-contract trade.
Prediction Markets · FinancialMarkets.com · · Tickers: SHY, TLT, HOOD
The market for an October Fed rate increase repriced on Monday. The timing is what stands out.
Kalshi's contract that pays out if the Federal Reserve raises rates by a quarter point at its decision traded at 17 to 18 cents from its first trade of the day at 6:16 a.m. Eastern through 11:23 a.m. Prices are market-implied probabilities, so the contract was pricing roughly a one-in-six chance of a hike.
The data that did not move it
At 10 a.m., the Institute for Supply Management reported that its services prices index rose to 74.0 in September, its highest since July 2022. That is the kind of inflation signal that would be expected to raise the odds of another increase. The contract did not respond. It traded between 17 and 18 cents for the next hour and 23 minutes, including a block of about 5,500 contracts at 18 cents at 11:15 a.m.
Six minutes
At 11:24:36 a.m., about 4,990 contracts traded at 19 cents. At 11:29:31 a.m., a single trade of 20,000 contracts printed at 19 cents, followed by about 15,000 more at the same price, and the contract swept to 20 and then 21 cents within the same second. By 11:57 a.m. it was trading at 21 to 22 cents, with prints of 3,000 and about 4,760 contracts at 21.
It touched 22 cents again at 12:58 p.m. in a sweep of about 3,000 contracts, and its last trade before 2 p.m. was 22 cents at 2:03 p.m., on about 2,080 contracts. That is a rise of about 4 to 5 cents on the day, on the largest volume of the session.
What happened at 11:24
The jump did not line up with an economic release or a public remark from a Fed official. Several explanations fit. Traders may have taken an hour to digest the ISM report's details. A single large participant may have moved the price by buying in size. Or a headline outside the usual economic calendar moved the market. The trades themselves do not distinguish among them.
Treasury yields climbed steadily through the same session, with the 10-year reaching its highest level since 2002 in the afternoon, which is consistent with a broader reassessment of rate risk over the day.
Against futures
Fed funds futures continued to price a hold in October, with odds of no change around 82%. Kalshi's 22 cents for a hike sits broadly in line with that, leaving a market that sees an October increase as possible but unlikely.
The calendar
Fed officials Michelle Bowman, Lorie Logan and John Williams speak Tuesday. Minutes from the September meeting, when the Fed raised rates for the first time in three years, arrive Wednesday at 2 p.m. September consumer prices on are the last major data point before the and 28 meeting. The contract's next big move is likely to come from one of those, and whether it holds above 20 cents after the minutes will show if Monday's buyer was early or alone.