Fed Rate Hike Odds Jump to 55%, But One Investor Sees Opportunity in Contrarian Trade

Market-implied odds of a September rate hike have jumped to roughly 55% after Fed Chair Kevin Warsh's Jackson Hole debut, up from about 40% a week earlier. This shift comes despite the Fed's last move being a cut on December 10, 2025, and the target having been pinned at 3.75% since then.

Warsh telegraphed the shift with his statement that 'it's hard to say that Fed policy is restrictive when you look at the economy right now', which was read as a straight hike signal on CNBC. Former Fed Vice Chair Roger Ferguson also expects two rate hikes and warned that standing pat would cost the Fed credibility.

However, CNBC Investment Committee member Bill disagrees with the 55% probability, calling it 'offsides'. He argues that Warsh will soften once data clears, specifically referencing the August CPI and PPI numbers. If Bill is right, NVIDIA (NASDAQ:NVDA) could be a high-beta way to press the trade.

NVIDIA has guided Q3 revenue to $108B, with approximately 70% fiscal 2028 growth outlook largely insulated from short-term rate moves. The S&P 500 tracking ETF is still up about 13% year to date, despite the 10-year Treasury yield hitting 4.66%. Watch for the August CPI and PPI numbers, as hot readings could validate the hike and weaken NVDA.