Warsh's Fed Overhaul May Increase Mortgage Rate Volatility

The CME FedWatch tool, which utilizes 30-Day Fed Funds futures prices, is a key resource for traders to track the market's implied probabilities of upcoming Federal Open Market Committee (FOMC) rate adjustments. This tool helps gauge sentiment on potential rate hikes or cuts at future meetings.

Recent data from the FedWatch tool indicates varying probabilities for future target rates. For the July 29, 2026 meeting, traders assign a 57.9% probability to a rate range of 3.50-3.75% and 42.1% to 3.75-4.00%. Looking further out, for the September 16, 2026 meeting, the probability of a 3.75-4.00% rate stands at 50.4%, with 27.5% for 3.50-3.75%. By October 28, 2026, the market anticipates a 44.1% chance of rates being between 3.75-4.00%, and a 29.9% chance of them being in the 4.00-4.25% range.