Markets Now Price a 100% Chance of a Fed Rate Hike in December 2026

By Olivia Hart

Traders now assign a 100% probability to a Federal Reserve rate hike at the December 2026 FOMC meeting, according to CME FedWatch pricing cited in a new market analysis by TradingView contributor chungngct. Within that fully-priced move, the market splits on size: 90.8% odds of a 400–425 basis point range and 9.2% odds of 425–450 bps.

That is a stark repricing. A market that once debated the pace of easing has flipped to debating the size of tightening — and the analysis, titled "BIG PICTURE | Inflation Is Back," argues the shift has three drivers: resilient growth, reaccelerating prices, and a new political balance in Washington.

What is the data actually saying?

The growth picture the author lays out is unambiguous. GDP accelerated through 2026: +1.6% in Q1, +2.2% in Q2, +3.4% in Q3. Nonfarm payrolls added 186,000 jobs in August, collapsed to 60,000 in September, then rebounded to 165,000 in October. Unemployment held at 4.1% in October.

That September payroll print deserves scrutiny. A swing from 186,000 to 60,000 and back to 165,000 in three months is noisy data, not a clean trend. The author nonetheless reads the totality as resilience, concluding the Fed "may have more room to prioritize inflation control rather than rush into monetary easing."

Why does inflation look like it is returning?

The CPI numbers are the strongest evidence in the piece. Headline CPI rose 0.6% in September and another 0.4% in October. Core CPI — the measure the Fed watches most closely — climbed 0.3% for three consecutive months. Run core CPI at that monthly pace and it compounds toward roughly 3.7% annually, well above the Fed's 2% target.

Energy is the sharpest contributor. Energy CPI jumped 5.2% in September, then added another 0.7% in October. The author flags oil as the key variable: even if crude retreats temporarily, unresolved risks around the Strait of Hormuz could keep energy-driven inflation alive.

The caveat is built into the framing. "The market needs to watch not only inflation itself, but also the Fed's reaction to it," the analysis states — a reminder that policy response, not the print alone, moves prices.

What changed in Washington?

The analysis also reads the midterm result as a monetary-policy event. Republicans lost both chambers of Congress, which the author calls "a significant political setback for Trump."

The electoral explanation offered is economic: rising fuel prices, living costs and inequality fueled voter frustration, while the benefits of the AI boom stayed concentrated among technology companies and wealthier households — what the author calls a K-shaped recovery. That is an interpretive claim, not a documented one; the piece offers no exit-poll data to support it.

The market consequence, in the author's view, is a constraint on presidential influence. Democratic control of Congress could limit Trump's agenda on military spending, budgets and future Fed appointments. It may also, the analysis argues, reduce room for direct political pressure on monetary policy — though Trump's public criticism of the central bank remains a stated risk.

Where do the dollar and gold go from here?

The analysis translates the macro call into specific levels.

DXY (U.S. Dollar Index):

• 104–104.5: critical resistance and decision zone
• 105: next resistance
• 106–107: potential upside targets if a breakout confirms

Gold:

• Key support zones at 3,900, 3,800, 3,700, 3,600 and 3,500
• A stronger dollar implies medium- to long-term downside pressure on the metal, per the author

The logic is straightforward: hawkish Fed plus reaccelerating inflation equals dollar strength, and dollar strength is historically gold's headwind. But levels are conditional, not causal — a breakout above 104.5 is the trigger, and the author does not claim it has happened.

What should investors watch next?

The author's bottom line shifts the story's center of gravity. "The story is no longer just about geopolitics or oil prices," the analysis states. "It is about the return of inflation, the Fed's policy response and the potential resurgence of the US dollar."

The operative question going forward: whether inflation spreads through the US economy broadly enough to force the Fed into a sustained hawkish stance, rather than a single December move. For answers, the author points to the upcoming CPI, PPI and PCE releases in the coming months as the decisive inputs for whether dollar strength can hold.

One analyst's closing instruction: "Watch the Dollar. Watch Inflation. Respect the Market."