Rate hike expectations escalated dramatically throughout October. At the beginning of October, roughly two weeks removed from the September Fed meeting, markets were in a 104% chance of the first hike in December 2022; that’s a 100% chance of a 25-bps hike and a 4% chance of a 50-bps hike. Overall, the first hike was anticipated in September 2022.
Now, just ahead of the November Fed meeting, Fed funds futures are discounting an 81% chance of a 25-bps rate hike in June 2022, having pulled forward the timeline from September 2022. Rates markets have not been more aggressive on Fed tightening since the pandemic began.