CME’s FedWatch tool shows a 99.4% chance the Fed holds rates this week and a 71% chance of hikes by end-2026 after May’s 4.2% inflation print. Structural spikes in volatility have driven record derivatives volumes and open interest, boosting CME’s toll revenues and underpinning a Buy rating.
CME’s FedWatch tool now assigns a 99.4% probability that the Federal Reserve will leave rates unchanged at its current meeting and a 71% probability of at least one rate hike by December 2026, reflecting shifting market expectations after a 4.2% inflation reading for May.
U.S. consumer prices rose at a three-year high of 4.2% in May, prompting markets to sharply increase their projections for future tightening and lifting CME’s implied rate-hike probabilities from below 50% to over 70% within days.
Heightened uncertainty around monetary policy has led to unprecedented levels of open interest and leveraged basis trades on CME’s platforms, driving record monthly derivatives volumes and strengthening its fee-based revenue model.
With turnover surging and Fed policy in flux, CME’s toll-collecting structure is benefiting from each extreme trading session, supporting analyst Buy recommendations as fee revenues climb on persistent macro volatility.
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