Prediction Market Traders Brace for Surprise Fed Rate Hike

Prediction market traders on Polymarket and Myriad have sharply increased the implied probability of a Federal Reserve rate hike at the upcoming July 28-29 FOMC meeting. On Polymarket, the odds of a 25-basis-point hike jumped 9.7 points to 26.65% in 24 hours, while the 'no change' outcome fell to 73.25%. Professional traders using Fed-funds futures priced the chance of a hike at 37.6%. A hike would raise the target range from 3.50%-3.75% to 3.75%-4.00%. The Fed held rates steady in June, citing elevated inflation, but June inflation cooled to 3.5% from 4.2% in May. The article notes that rate hikes tend to pressure risk assets like Bitcoin and tech stocks, while cuts encourage them.