Kalshi traders held the chance of a quarter-point increase at about 67%, up slightly from Friday, as Monday's bond selloff played out in longer maturities.
Monday's rates move was large. Very little of it showed up in the bet on the Federal Reserve's next meeting.
On Kalshi, the contract for a quarter-point increase at the Oct. 27-28 meeting traded at about 67% on Monday afternoon, the same as early in the day and up from about 65% on Friday afternoon. The price of no change was about 35%, and a move larger than a quarter point about 1%. The market traded about $3.7 million over 24 hours. Futures markets priced the October hike near 70%.
Where the move happened
The Treasury market moved much more. The 10-year yield rose about 8 basis points to near 5.25%, on track for its highest close since 2007, and the 30-year traded near 5.57%. The two-year note rose about 6.5 basis points to near 4.93%.
That split points to where traders are adding risk. The October decision was already priced as the likely outcome, so Monday's news had little room to move it. The larger adjustment was in longer maturities, which reflect the path of rates over years, the term premium investors demand for holding long bonds, and concerns about the supply of Treasuries. Futures price the equivalent of at least three quarter-point increases over the next year.
Fed Governor Lisa Cook's comments on Monday did not shift the October contract either. She said the labor market "appears to be well positioned to handle an increase in rates" and that the AI buildout and oil prices would keep pressure on inflation, a view already consistent with a hike.
The data ahead
The October contract has moved in a narrow band since the Fed raised rates on Sept. 16, climbing toward 70% after Governor Michael Barr's remarks on Sept. 23 and slipping to about 64% on Friday before recovering. The contract has been more responsive to Fed speakers than to the bond market's daily swings.
That could change this week. The August personal consumption expenditures report on Wednesday is the most direct input on inflation before the meeting, and the September jobs report follows on Friday. A firm core inflation reading would test whether the contract can break above its recent range near 70%. A soft one, with yields still high, would show the bond market and the Fed contract diverging further.