Large sellers twice took 50,000 contracts at 12 cents on Friday, after import prices and industrial output came in hot. Buying followed both, and the contract was at 13 cents in early afternoon, where it stood before the data and roughly where futures put the odds.
The clearest signal in Friday's Fed trading on Kalshi was not the price. It was who was willing to put money behind it.
At 10:38 a.m. Eastern, a single order bought 50,000 "no" contracts on a quarter-point increase at the Oct. 27-28 meeting, at a price that left the "yes" side at 12 cents. At noon, an identical-size order did the same. Each contract pays $1 if correct, so a buyer of "no" at 88 cents risks 88 cents to make 12. Those two trades put about $88,000 at risk to win about $12,000, by this publication's arithmetic. Whoever placed them was confident, or hedging something larger.
The other side
The price did not keep falling. Buyers of the hike outcome took 19,700 contracts at 12 cents at 11:52 a.m., then 10,000, 20,000 and another 10,000 at 12 cents between 12:01 and 12:19 p.m. Counting a 10,000-contract purchase at 13 cents at 9:21 a.m., buyers initiated about 69,700 contracts against the sellers' 100,000 in the largest prints.
The range tells the rest. The contract slipped from 14 to 13 cents before dawn, about three hours before the data, dipped to 11 cents in the late morning and was back at 13 cents at 1:46 p.m. From the release of the data to early afternoon, a day of heavy one-sided blocks left it unchanged. The larger move had come overnight Thursday, after the Fed chair's remarks, when the contract fell from about 28 cents to 14.
Data the market had already discounted
The morning's economic reports leaned hawkish. September import prices rose 1.1%, and 8.1% over the year, the largest annual increase since 2022. Industrial production rose 0.7%, against 0.4% expected. Neither lifted the hike contract; the low came after both had been published.
That fits what Fed Chair Kevin Warsh has been telling markets. He said "I don't prejudge meetings" and declined to signal the outcome of the October or December decisions, called artificial intelligence "probably the most consequential change to the U.S. and the global economy in my lifetime" and said a Fed task force on AI would meet on Nov. 16. A strategist at BNY said there is not "enough support in (the) committee, particularly from the governors, for a rate hike in October."
Futures agree. CME Group's FedWatch tool showed an 85% chance of no change in October late Friday morning, which leaves about 15% for a hike. Kalshi at 13 cents is close to 1 in 8. The two venues are within a couple of points of each other, a gap that has been wider at times this month. Prices in both reflect what traders will pay under each contract's terms, not the committee's own leanings.
The dollar index fell to about 101.6, on course for its first weekly fall in more than a month.
Market implications
One reading is that the big sellers know the reaction function. With inflation already known to be running hot, another hot print changes little, and a chair who will not prejudge is unlikely to surprise in 11 days. On that view, $88,000 to win $12,000 is a reasonable price for a near-certain outcome.
A second reading is that the buyers who followed those blocks see value at 12 cents. Nonfuel import prices are rising at their fastest annual pace since 2022 and output beat forecasts, and a committee looking at the same data may move sooner than its chair's tone suggests. Paying 12 cents for a 1-in-8 outcome is a cheap hedge against that.
What to watch
Chicago Fed President Austan Goolsbee speaks at 6 p.m. Eastern Friday, the last scheduled Fed remarks before the quiet period begins on Saturday. If the contract rises above 20 cents without new data or Fed comments, it would suggest someone is building a position against the consensus; if another large "no" block pushes it to 10 cents or lower, the sellers will have won the argument before the meeting.