What changed in Fed rate expectations?

TLDR

Fed rate expectations flipped dovish this week. Markets now price a December rate cut with roughly 7085% odds, up from about 3040% last week per futures-based gauges like CME FedWatch reported by major outlets.

1. Dovish signals from top officials, including John Williams, pushed odds sharply higher this week.
2. The dollar eased and risk assets rallied; Bitcoin rebounded above $90,000 on cut bets this week.
3. Uncertainty remains as mixed data and earlier delays cloud visibility, but markets lean toward near-term easing this week.

Deep Dive

1. Odds Jumped

The implied probability of a 25 bp cut in December rose from roughly 3040% last week to 7087% this week, according to futures-based measures cited across market coverage here and here.

• Several outlets highlighted the swing, noting a rapid repricing after recent remarks and softening anecdotes in the Feds Beige Book this week.
• Some reports placed the probability near the high end of that range late week this week.

2. Why It Shifted

Comments from New York Fed President John Williams about room for a further adjustment were a key catalyst, reinforcing a near-term tilt toward easing this week.

• Additional signals from Governor Christopher Waller and others nudged investors toward a December cut this week.
• Mixed macro readings and earlier data delays after the government shutdown added uncertainty, pushing markets to weight official guidance more heavily this week.

3. Market Impact

A softer dollar and firmer risk appetite followed the shift. Equities pared November losses and Bitcoin (BTC) rebounded above $90,000 amid the repricing toward cuts this week and this week.

• Crypto-specific coverage echoed the move in odds and linked it to improving sentiment and breadth, with caution that data and the upcoming meeting still matter this week.

Conclusion

Fed rate expectations have pivoted toward a December cut as official commentary and softening signals shifted market odds sharply higher. That repricing boosted risk assets and eased the dollar, but the path depends on upcoming inflation and labor data and the actual FOMC decision. For crypto, easing supports liquidity, yet a hawkish surprise could reverse recent gains.