CME FedWatch shows September rate hike odds fall from ~60% to ~30% after weak jobs, cooler CPI
Source: Bloomberg Television · All Bloomberg Television reports
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Summary
The Bloomberg Television segment reviews shifts in CME FedWatch Tool probabilities for the September 2026 FOMC meeting. It notes an initial ~60% chance of a rate hike (including small odds of 50bp) in late July that fell to ~30% after the August 7 employment report and August 12 CPI release. The report highlights labor market softening in the jobs data and the CPI breakdown showing headline cooling to 3.4% while core fell to 2.5%, attributing much of the remaining inflation to volatile energy. It cautions that inflation remains above the Fed's 2% target and that future reports will determine if the dip is sustained or temporary, suggesting the Fed is likely to hold in September but the longer-term path is uncertain.
Sourcing relies on official BLS employment and CPI releases, real-time CME FedWatch futures pricing, and narrative context around prior hotter May 2026 readings (4.2% headline). No named guests or external experts appear; the segment uses graphics for probability changes and CPI trends as a CME Group presentation.
Editorial Assessment
The segment is accurate and well-sourced to primary government data and market pricing tools. Claims on the July jobs report (payrolls -23k, unemployment 4.1%) and July CPI (3.4% headline, 2.5% core, second consecutive decline) are verified by BLS releases. The probability shift aligns with reporting from early-to-mid August showing odds dropping from near 50-60% pre-jobs report to the low-30% range post-CPI. Viewers receive clear cause-and-effect on how softer labor data and energy-driven headline cooling altered market expectations. What is slightly understated is that Fed July minutes (released later) showed several participants still favored a hike and many saw tightening as likely needed, keeping September live for some officials. Energy volatility from the Iran conflict context is mentioned but could use more quantitative detail on gasoline's contribution. Overall, a restrained, data-focused explainer that avoids overclaiming the inflation problem is solved.
Key Moments
CME FedWatch showed almost 60% probability of a September rate hike in late July, including ~7% for 50bp
Matches June-July 2026 reports citing 55-65% hike odds before the August jobs miss; contemporaneous CME data supported elevated probabilities amid energy-driven inflation.
August 7 employment report showed clear labor market weakness
BLS reported -23k nonfarm payrolls in July (versus +80k expected), large downward revisions to prior months, confirming softening.
August 12 CPI showed headline 3.4% YoY (second consecutive decline from 4.2% in May) and core 2.5%
BLS data: July 2026 headline CPI 3.4% (from 3.5% in June/4.2% in May), core 2.5%; energy drove much of the headline move while core eased.
Combination of weakening labor market and contained core inflation gives Fed reason to stand pat in September
Accurate on market reaction and data trends, but July FOMC minutes indicated several participants favored a 25bp hike and many saw tightening as needed if inflation stalled.
3.4% headline inflation still well above Fed's 2% target and oil prices remain volatile
Directly from BLS and consistent with Fed's stated 2% PCE target; energy component up 14.7% YoY due to geopolitical factors.
Notable Concerns
- Slight rounding of CME probabilities (actual post-CPI figures closer to 33-35% hike odds in mid-August reports)
- Does not incorporate July FOMC minutes released August 20 showing officials viewed further tightening as likely if inflation does not decline
Sources Consulted
- Consumer prices up 3.4 percent over the year in July 2026
- Employment Situation Summary - July 2026
- Odds the Fed hikes in September tumble following big July jobs miss
- Fed Seen Holding Rates Steady in September With 66.9% Probability
- Fed minutes show September rate hike still on the table
- July 2026 Inflation Update (Joint Economic Committee)
- CME FedWatch Tool