Kalshi traders give a 74% chance that Fed Chairman Kevin Warsh says the word “oil” at this week’s press conference, and better than even odds he says “shock.” Behind the word bets sit higher odds of a surprise rate increase, now around 38% on CME’s FedWatch tool against 16% last week.
Traders on Kalshi put a 74% chance on Fed Chairman Kevin Warsh saying the word “oil” at this week’s press conference. The same contract gives over 50% odds he mentions “shock”. The event contract is one of the leading mention markets on the platform as of Monday afternoon, and it resolves on what Warsh says at a press conference set for Wednesday at 2:30 p.m. ET.
June’s Federal Open Market Committee meeting ended with a much shorter statement from the Federal Reserve, and Warsh gave no forecast on the outlook for rates. He will likely stay tight-lipped again this week.
The energy shock behind the word bets
This week’s meeting comes after Iran and the U.S. paused their fighting. Both countries exchanged attacks last week, briefly pushing Brent crude back above $100 per barrel. The halt took the air out of the oil gains, with Brent trading back below $89 on Monday.
Though Kalshi traders see a likelihood of Warsh referring to an energy supply shock, Bank of America said on Monday that standard policy for the central bank is to avoid responding to it.
Hike odds climb to around 38%
The Fed is largely expected to keep its overnight benchmark rate unchanged, per CME Group’s FedWatch tool. But odds of a rate hike this week have increased to around 38% from 16% last week, per FedWatch. One Kalshi contract on the July decision projects a nearly 75% chance the Fed maintains rates at current levels. Another shows 68% odds of the next hike taking place this year.
Evercore ISI wrote that moving right after the better June inflation print would be odd given a path to hike in September if needed, but added: “we cannot take the probability too low”.
Polymarket and Myriad move the same way
Prediction markets beyond Kalshi shifted in step. On Polymarket, the “no change” outcome fell 8.9 percentage points to 73.25% in the last 24 hours. A 25-basis-point increase jumped 9.7 points to 26.65%. Myriad, a prediction market operated by Decrypt’s parent company Dastan, showed 74% for “no change” and 27% for an increase.
A 25-basis-point hike would lift the Fed’s current target range from 3.50%-3.75% to 3.75%-4.00%. The FOMC releases its interest-rate decision at 2 p.m. Eastern time on July 29.
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