The market's own real-time guess at what the Fed will do next, priced through futures trading.
Traders don't just wait for the Fed to announce a decision, they bet on it in advance through futures contracts tied to the federal funds rate, and that trading activity gets converted into a percentage: a "60% chance of a September hike," for example. Tools like the CME's FedWatch pull this number from real money changing hands, not a survey of opinions, which is why it moves constantly as new economic data lands. A single soft jobs report or hot inflation print can swing the odds by twenty points in a day, well before the Fed itself says a word.
Part of the Open Bell Glossary — plain-English explanations of the terms that come up on the show. Browse every term.