8Factor Report #9: The Fed Skipped October. Is December a Done Deal?
Report #4 said traders were betting the Fed would pause for exactly one meeting and then hike again. The pause happened. Now Kalshi and Polymarket both price a December 9 hike at 77–78%, and CME futures are higher still. We graded the market and tried to break the consensus.
*Predictagon 8Factor Report · No. 9 · November 4, 2026 · Read-only analysis. Not financial advice.*
The market at a glance
| Dec 9 FOMC | Kalshi | Polymarket |
|---|---|---|
| Hike 25 bps | 77¢ bid / 78¢ ask | 77¢ bid / 78¢ ask |
| Hold | 22¢ / 23¢ | 21¢ / 22¢ |
| Hike 50+ bps | 1¢ / 2¢ | 1.3¢ / 1.4¢ |
| Any cut | ~1¢ | under 1¢ |
| Volume | ~696K contracts on the hike leg | ~$12.1M lifetime; ~$1.19M in 24h |
| CME FedWatch (after Oct 28) | 82.6% hike |
Trade it on Polymarket → · Trade it on Kalshi →
The 8Factor scorecard
| Factor | What it asks | Grade |
|---|---|---|
| 1 · Compare | Do the venues disagree? | C |
| 2 · Fair value | What's the real probability? | B− |
| 3 · Net edge | Is anything tradable after costs? | B |
| 4 · Timing | When does it close? | A− |
| Red team | Hot October CPI · Oil · Hawkish dissents · Rule details | 4 live risks |
Verdict: no arbitrage, and a modest lean toward a hold. Both venues sit at 77.5%, with futures at 82.6%. Our fair value is 68%. Headline inflation is rising, but almost all of it is energy. Core is at 2.6%, and the labor market is barely adding jobs. The Fed also decides before November's CPI report is out. A hold at 22¢ is the value side, with real risk if October's numbers run hot.
First, the scorecard on Report #4
On October 5, Report #4 put a hike at the October 28 meeting at 18% (market 20%) and called October "fairly priced." It flagged the October/December split, about 80% October hold and 75% December hike, as the fragile part.
October: we were right. The Fed held at 3.75–4.00% on a 10–2 vote. Kalshi's October market finalized "Fed maintains rate" at 97¢ before resolution.
December: unresolved, and now more expensive. The December hike has gone from about 75% to 77.5% on the venues and 82.6% in futures. This report grades that move.
Why this market, why now
The October meeting. The Fed held rates on October 28. Two officials dissented in favor of a 25 bps hike: Cleveland Fed President Beth Hammack and Governor Lisa Cook. Chair Kevin Warsh said politics played "no role," six days before the midterms. He also said the Fed will cut its number of rate-setting opportunities to six a year starting in 2027, adding two "strategy" meetings.
The data since:
The election. Democrats won both chambers on November 3. That doesn't change the December inflation or jobs math directly.
Ahead: October jobs (November 6), October CPI (mid-November), November jobs (December 4), then the decision on December 9. November CPI comes out December 10, the day after the decision.
Factor 1 · Compare: Grade C
Question: do the venues disagree?
No. 77/78¢ on Kalshi and 77/78¢ on Polymarket for the same 25 bps hike, the same quote on both venues. CME futures at 82.6% are about five points higher, which is common: futures prices include risk premium and aren't directly comparable. No venue edge.
Factor 2 · Fair value: Grade B−
Question: what's the real probability the Fed hikes 25 bps on December 9?
> AI fair value (hike Dec 9): 55% low · 68% mid · 80% high. Confidence: B−.
Why a hike is likely:
Why 77–83% is too confident:
Divergence:
| Source | Hike price | AI mid | Divergence |
|---|---|---|---|
| Kalshi | 77.5¢ | 68% | −9.5 pts |
| Polymarket | 77.5¢ | 68% | −9.5 pts |
| CME FedWatch | 82.6% | 68% | −14.6 pts |
Flipped around, we put a hold at about 31% (with about 1% for other outcomes), against 21–23¢ on the venues.
Factor 3 · Net edge: Grade B
Net Edge = divergence × log10(volume + 1)
Cross-venue lock: buy hike on Kalshi at 78¢ and hold on Polymarket at 22¢ = 100¢, with nothing left over and losses if the Fed cuts or hikes 50 bps. PAPER.
The directional trade: hold at 22–23¢ against a 31% fair value is roughly a 35–40% expected-value cushion, on a $12 million Polymarket book with tight 1¢ spreads. That's tradable at real size. It's a B, not an A, because our confidence is B− and a single hot CPI print erases the edge.
Factor 4 · Timing: Grade A−
Short clock, clear catalysts, deep books. The minus is because one data release does most of the work.
The Red Team: four ways this call breaks
Our call is "the December hike is about 10 points rich."
Red 1 · October CPI runs hot
If October CPI repeats September's 0.6% monthly print, or core rises above 0.3% on the month, the hold case collapses. A December hike goes to 90% or more, and our view loses fast.
Watch: the October CPI release, core month-over-month above 0.3% especially.
Red 2 · Oil keeps climbing
September's jump came from gasoline, driven by the Iran war's effect on crude. If oil rises further, inflation expectations can start to move, and a Fed watching expectations hikes regardless of core.
Watch: crude prices and 5-year breakevens through November.
Red 3 · The hawks get the votes
October was 10–2 with two hawkish dissents. It only takes a few more members moving to the hike camp to make December's hike close to unanimous, and Warsh may want to lead that rather than resist it.
Watch: speeches by voting members before the pre-meeting blackout, especially any shift from members who voted to hold in October.
Red 4 · The plumbing: what counts as a hike
Fed contracts typically resolve on the upper bound of the target range in the official statement. An intermeeting move, a 50 bps hike, or a change to administered rates without a target change can create edge cases where venues resolve differently.
Watch: each venue's resolution text, especially intermeeting-move and size clauses.
Bottom line
| Signal | PAPER (venues identical; futures ~5 pts higher) |
| December view | Hike modestly rich: 68% model vs 77.5% venues / 82.6% futures |
| Value side | Hold at 22–23¢ vs ~31% fair |
| Clock | 35 days, resolves Dec 9 |
| Biggest risk | Red 1: a hot October CPI print |
Report #4 said October would be a skip and December would be the real question. October was a skip. December now prices as close to settled, on headline inflation that's mostly gasoline and a labor market that's barely growing. We think the hike is likely but not 4-to-1 likely.
New 8Factor Reports publish every week at Predictagon.com/8Factor.
Data notes and methodology
Sources: CNBC: Five takeaways from the October Fed decision · Yahoo Finance: Rates held in split vote · Federal Reserve: Oct 28 press conference transcript · BLS: CPI, September 2026 · CNBC: September CPI breakdown · Kalshi: December Fed meeting · Polymarket: Fed Decision in December