Fed rate hike odds for January 2027 climb to about 49% after the hot October CPI, as the 2-year Treasury yield posts its biggest jump in 19 months
The trigger was a tenth of a point. October consumer prices rose 0.4% and core prices 0.3%, each a tenth above forecasts, as covered in our October CPI report. Hours earlier Governor Christopher Waller had said that a core reading of 0.3% or more would make a 50 bp December hike worth considering, according to Reuters. The first reaction was in the size of the December move. Through the afternoon, the bigger shift moved further out the calendar, to whether the Fed keeps going in January.
What the market is pricing
Prices read directly from the public Polymarket Gamma API and the Kalshi trade API:
| Outcome | Polymarket | Kalshi | Before CPI (approx.) |
|---|---|---|---|
| January 2027: hike 25 bp | 49.5% (16:48 UTC) | 47.5% (16:50) | 25% to 27% |
| January 2027: no change | 49.0% (16:48) | 51.0% (16:50) | not recorded |
| December 9: hike 25 bp | 84.5% (16:50) | 84.5% (16:50) | 87.5% / 88.0% |
| December 9: hike 50 bp or more | 10.8% (16:50) | 12.5% (16:50) | 4.3% / 5.0% |
| December 9: no change | 4.1% (16:50) | 3.5% (16:50) | 6.5% / 7.5% |
Kalshi figures are the midpoint of the bid and ask; its January hike contract was 46 cents bid and 49 cents offered. Pre-CPI values come from BetG8's 13:21 UTC readings. The two venues now differ by about two points on January, a small gap for a contract that has moved more than 20 points in a day. The live board is on our Fed rate decision odds page.
The bond market moved first
Short-dated Treasuries sold off within minutes of the release. Seeking Alpha reported the 2-year yield up 12 basis points to 4.68%, and a later Reuters market wrap put it up 15 bp at 4.69%, with the 10-year up 9 bp at 4.96% and the dollar index up 0.3% at 102.01. Reuters described it as the 2-year's largest rise since early April 2025. The 2-year is the cleanest market read on where the Fed is going over the next several meetings, so a move of that size lines up with prediction markets adding a January hike to a December one. The iShares 1-3 Year Treasury ETF (SHY) traded at $81.31, down 0.35%, at 16:47 UTC, per Twelve Data.
Dallas Fed President Lorie Logan added to the hawkish tone, saying "it may be possible to move more rapidly" and calling the current 3.75% to 4% range too low, according to Reuters.
Context: a week of mixed signals
The repricing came after a run of data pointing in different directions. On Monday the New York Fed's Survey of Consumer Expectations put the mean probability that US unemployment will be higher a year from now at 45.3%, up 1.4 points and the highest since April 2020, while median inflation expectations held at 3.9% one year out, 3.3% at three years and 3.0% at five years. That mix of sticky inflation views and rising job worries is the bind the committee faces.
Stocks had rallied into the report. The Dow rose 2.15% to about 52,390 on Monday, the S&P 500 gained 2.35% and the Nasdaq 2.74%, helped by lower oil and a chip rebound, according to The Motley Fool. Much of that gain faded on Tuesday: QQQ traded at $670.67, down 1.28%, at 16:50 UTC, per Twelve Data.
Abroad, the Bank of Japan's summary of opinions from its October meeting showed several members wanting faster hikes from its 1.25% policy rate, with a move to 1.5% in December widely expected, according to Reuters. The yen did not benefit: USD/JPY traded near 158.8, up about 0.7% on the day, at 16:51 UTC, as the US side of the rate gap widened again.
What to watch next
Producer prices and the next round of Fed speakers before the December 8-9 meeting will decide whether January holds near 50%. Watch the December 50 bp contracts too: if a half-point move gains ground, January odds could fall, since a bigger hike now could replace a second one later. A sustained gap of more than two or three points between Kalshi and Polymarket on January would also be worth noting, since gaps on Fed contracts usually close fast.
Method and limits
Polymarket prices are midpoints of best bid and ask from the public Gamma API, read at 16:48 UTC (January) and 16:50 UTC (December). Kalshi prices are bid and ask midpoints from its public trade API, read at about 16:50 UTC. Earlier readings come from BetG8's live Fed page. Yield figures are as reported by Seeking Alpha and Reuters; BetG8 did not read Treasury yields directly. Prices are not forecasts and nothing here is investment advice.
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Frequently asked questions
What are the odds of a Fed rate hike in January 2027?
At 16:48 UTC on November 10, 2026, Polymarket priced a 25 bp January hike at 49.5%, and Kalshi priced it at 47.5% at 16:50, up from roughly 25% to 27% before the October CPI report.
Why did the 2-year Treasury yield jump?
October core CPI rose 0.3%, above the 0.2% forecast, which pushed traders toward a faster Fed path. Seeking Alpha reported the 2-year up 12 bp to 4.68%, and a later Reuters wrap had it up 15 bp at 4.69%.
Is a December Fed hike still expected?
Yes. Both venues priced a 25 bp December hike at 84.5% at 16:50 UTC, with a 50 bp or larger move at 10.8% on Polymarket and 12.5% on Kalshi. These are market prices, not forecasts.
Sources
- Reuters via Investing.com, Hot October inflation report rattles markets
- Reuters via Investing.com, Investors boost odds of half-point Fed hike as core CPI rise meets Waller's bar
- Seeking Alpha, Treasury yields climb across the curve after the latest inflation print
- Federal Reserve Bank of New York, Survey of Consumer Expectations, October 2026
- Reuters via Investing.com, Some in BOJ called for faster rate hikes, October summary shows
- The Motley Fool, Stock market today, Nov. 9
- Polymarket, Fed decision in December?, read 16:50 UTC, November 10, 2026
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