Fed December hike odds stay near 73% as midterms arrive
Fed December hike odds on Polymarket still price a 25 basis-point increase near 72–73% Yes into Election Day, even after a sharp drop in oil prices eased some near-term inflation pressure.
Oil's collapse has not rewritten the December rates market. Fed December hike odds on Polymarket continue to favor a 25 basis-point increase by a wide margin as traders also digest U.S. midterms and a soft patch in risk assets.
What happened
Polymarket's contract on a 25 bps increase after the December 2026 FOMC meeting showed Yes near 72.5% and No near 27.5% in Tuesday's gamma snapshot, with roughly $436,000 of liquidity and about $2.61 million of volume. The market ends 2026-12-09T23:59Z, matching the meeting scheduled for December 8–9.
The no-change bracket remains the distant second choice at about 25.5% Yes. Cuts of 25 or 50 bps and a 50 bps hike each trade as thin tails under 2% on the same event page.
Cash gold and oil markets are sending a mixed macro signal. CNBC said spot gold rose 1.8% to $3,943.62 on Monday as oil fell about 8%, while Kitco put spot gold near $3,945.80 and WTI's settle at $96.46, down 7.4%. CNBC quoted CME FedWatch traders seeing roughly a 75% chance of a December hike, down from about 80% a week earlier. Kitco noted the federal funds target still sat at 3.75% to 4.00% after October's hold and said Monday's oil plunge had reduced energy-driven inflation concerns without erasing futures pricing for another tightening step. ISM manufacturing data the same day showed factory activity expanding faster in October even as input prices stayed elevated, a mix that keeps the labour report central for December.
Why it matters
The persistence of hike pricing after an energy shock is the story. Soft oil usually trims inflation expectations, yet Polymarket and FedWatch still treat another tightening step as the modal outcome into the December meeting.
That lines up with the messaging our Fed hike calls report tracked from regional presidents who kept December in play. Markets have not needed a fresh speech to keep the 25 bps contract dominant.
The data calendar still matters more than election night for this contract. Our October jobs report preview framed Friday's payrolls as the next hard input; a soft print would be the clearest path to compressing Fed December hike odds before the blackout.
Gold's bounce on cheaper crude shows some inflation relief is already being priced in commodities, but rates markets are waiting for labour and core inflation confirmation rather than a single oil session. Peter Grant of Zaner Metals told CNBC the softer oil tape lowered inflation worries even while December hike odds only eased modestly, and Julius Baer's Carsten Menke argued persistent U.S. deficits should remain a longer-term support for gold regardless of the midterm outcome. That split — bullion catching a bid on energy relief while Polymarket still prices another 25 bps move as the modal December outcome — is why election night alone is unlikely to rewrite the rates ladder.
What's next
The next catalysts are midterms reaction in the dollar and yields, then the October employment report and subsequent CPI/PCE prints before the December blackout. CNBC's gold and Fed wrap captures how traders are reading the oil-driven inflation relief against still-elevated hike probabilities.
Watch whether Fed December hike odds slip below 65% if payrolls disappoint, or whether a firm labour report pushes the 25 bps Yes contract back toward the high 70s.
Until then, the Polymarket ladder still says the burden of proof sits with anyone calling for a hold.
This article is for information only and is not investment advice.