Fed Rate Hike Odds Plummet to 33% Amid Slowing Economy

Kalshi traders have reduced their expectations of a September Federal Reserve interest rate hike to 33% after the release of the July jobs report.

The report showed that nonfarm payrolls fell by 23,000 for the month, compared with a downwardly revised 20,000 in June. The unemployment rate fell to 4.1%, but the labor force participation rate dropped to its lowest level in over five years at 61.4%.

The decline in jobs and stagnant wages may indicate that the economy is slowing down, which could lead the Federal Reserve to keep interest rates unchanged next month. In fact, Kalshi markets now predict a hold at 65%, with only a 33% probability of a 25-basis-point hike.