The dot plot pointed lower, the futures curve pointed lower, and the consensus survey of every major Wall Street strategist pointed lower.
On Friday morning, the question changed. A Fed rate hike is now more likely than not by December 2026.
For the near-vertical AI rally that has carried Wall Street to record highs over the past six weeks, this is the moment reality reasserts itself.
The CME FedWatch tool, which aggregates probabilities derived from Fed funds futures and translates them into the implied likelihood of each policy band at every upcoming FOMC meeting, now shows a 56% chance of a hike by the end of the year.
The curve does not stop there. By March 2027 the hike probability sits at 96.71%, effectively certain.
Polymarket’s “Fed rate hike in 2026?” contract now trades at 34%, that’s roughly triple the 10% to 12% range it inhabited through most of April.
Future Interest Rate Probabilities As Of May 15, 2026
MEETING DATE
3.25-3.50
3.50-3.75 (HOLD)
3.75-4.00 (+25BP)
4.00-4.25 (+50BP)
JUN 17, 2026
0.00%
99.64%
0.36%
0.00%
JUL 29, 2026
0.00%
97.50%
2.50%
0.00%
SEP 16, 2026
0.00%
83.00%
17.00%
0.00%
OCT 28, 2026
0.00%
67.50%
32.50%
0.00%
DEC 9, 2026
0.00%
43.57%
56.43%
0.00%
JAN 27, 2027
0.00%
27.50%
72.50%
0.00%
MAR 17, 2027
0.00%
3.29%
96.71%
0.00%
APR 28, 2027
0.00%
0.00%
91.50%
8.50%
JUN 9, 2027
0.00%
0.00%
86.29%
13.71%
Source: CME FedWatch Tool
Drop The Easing Bias, Go Straight To A Tightening Bias
In a note shared to clients on Friday, Ed Yardeni, president at Yardeni Research, flagged that two important psychological levels in the U.S. Treasury market are being tested at the same time.
The 2-year yield closed at 4.052%, up 0.92% on the day and 25 basis points ...
