FedWatch: October Rate-Hike Odds Slide to 18% After Cooler Jobs and Inflation Prints

Market pricing is leaning strongly toward the Federal Reserve standing pat at its October 28 meeting. CME Group's FedWatch tool now implies an 18.3% chance of a hike, with cuts still priced at 0%. Investors are not treating a hold as an all-clear. The Fed lifted rates in September, its first increase since 2023, and another move in December remains a live scenario. FedWatch's implied probability for an October hike was 37.6% on September 30. By October 8, it had dropped to about 18%. The shift follows a weaker September labor report, which showed employers adding 29,000 jobs versus forecasts near 90,000. Inflation has also surprised to the downside. The core Personal Consumption Expenditures (PCE) price index, the Fed's preferred measure, rose 0.2% in August, undershooting expectations. Fed Vice Chair Philip Jefferson and New York Fed President John Williams have also indicated there's no urgency to act again. Rate cuts look distant for an additional reason: the September meeting minutes showed most Federal Open Market Committee (FOMC) participants viewed another hike in 2026 as likely appropriate. Energy prices remain a wildcard. Yahoo reported oil rose roughly 14% in the month through September 29, topping $96 a barrel. For crypto markets, a pause could remove one near-term headwind for Bitcoin, even if the next hike is merely pushed to December, where Goldman Sachs now expects it. After the soft jobs release, Bitcoin jumped within minutes, triggering roughly $27.5 million in short liquidations in about an hour, according to CoinGlass. Bond yields still complicate the picture. The 10-year Treasury yield reached 5.342% on October 1, the highest level since early 2002. Analyst Benjamin Cowen says some bond traders worry the Fed may tighten too little, helping drive yields higher. He expects that fear to crest around the October 28 meeting. That sets up a key test: whether markets interpret a delayed hike as relief or as a larger adjustment later. With 16 of 18 Fed officials projecting another hike, the October 14 inflation report could carry more weight than the meeting decision itself.