AI-Toolz

Markets are pricing about 30 basis points of easing for the Sept. 17 Federal Open Market Committee decision, split between a base case quarter point cut and a smaller tail for 50 basis points. Should rates drop 50bps, Bitcoin could eye a return to all-time highs. According to CME Group’s FedWatch tool, probabilities as of Sept. 10 at 7:30 A.M. CT stood near 90 percent for a 25 basis point move, about 10 percent for 50, and close to zero for no change, with an implied cut size of roughly 27 to 29 basis points. Additionally, Polymarket’s $21 million prediction contract leans even further toward a potential 50bps cut. Predictions cluster around 81 percent for 25, 17 percent for 50, and 3 percent for a hold, which maps to about 28.8 basis points of easing. The backdrop to the decision has shifted materially over the past two months. A Bureau of Labor Statistics benchmark shows the United States created about 911,000 fewer jobs through March 2025 than initially reported, the largest downward adjustment since 2009. Inflation progress is uneven by gauge, with core CPI near 3.1 percent year over year in August per the BLS and core PCE at 2.9 percent in July according to the Bureau of Economic Analysis. The front of the Treasury curve reflects an easing path while the long end remains anchored by term premium and fiscal dynamics. A Reuters strategist poll points to a steeper curve into year-end, with the two-year yield around 3.40 percent in twelve months and the ten-year yield near 4.25 percent, implying a two-tens spread near 85 basis points. Cleveland Fed economists place the nominal neutral policy rate near 3.7 percent, which means policy would remain above neutral even after a quarter- to half-point trim. Near-term catalysts before the announcement can move the distribution. Producer prices came out at 8:30 A.M. ET today, consumer prices are due Sept. 11 at 8:30 A.M. ET, and retail sales are due Sept. 16 at 8:30 A.M. ET, per federal calendars. PPI came out at -0.1, which pushed CME projections for a 50bps marginally higher to 10%, though Polymarket odds dropped slightly to 16%. Prediction market for September Fed decision (Source: Polymarket) The other releases can shift the 25 versus 50 split and the near-term tone across risk assets, particularly through the two-year yield and the dollar. 25bps cut in September A base case of a 25 basis point cut to a 4.00 to 4.25 percent target, paired with a balanced SEP, remains the market default. Street forecasts lean to a quarter point with two to three additional cuts in 2025, and the dots would likely reflect a shallow path into 2026 as growth marks ease. In that scenario, rates markets tend to deliver a modest bull steepener, with the two-year down about 10 to 20 basis points over one to three days, the ten-year flat to 10 basis points lower, and the dollar down about 0.3 to 0.8 percent. Equities usually key off the press conference tone rather than the statement alone, leaving SPY up roughly 0.3 to 1.