Fed Futures Price 34% December Rate Hike After 3.8% CPI and 6.0% PPI

5 articles · Updated · InvestorPlace · May 15

CME FedWatch now shows nearly a 34% chance of a Fed rate hike by December and about 53% by April 2027, a sharp reversal from two cuts priced at the start of 2026.
Tuesday’s 3.8% CPI and Wednesday’s 6.0% PPI — the hottest readings in years — drove the shift as traders abandoned expectations for near-term easing.
The report argues the inflation burst is largely energy-driven, tied to the Iran conflict’s impact on oil, diesel, shipping and trucking costs rather than broad demand or wage pressure.
That view clashes with futures pricing: Louis Navellier, Treasury Secretary Scott Bessent and incoming Fed Chair Kevin Warsh contend AI-led productivity will prove disinflationary and keep rate cuts, not hikes, as the eventual policy path.
The latest market move extends a broader repricing seen in earlier trading, when investors had already lifted the odds of a 25-basis-point hike by January to about 60%.

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