The Market Is Now Forecasting More Than 3 Hikes In 2022

Investors increasingly believe the Fed will hike sooner and more often in 2022.

CME Fedwatch Tool has rate hike odds for every FOMC meeting through the February 23, 2023 meeting.

The above chart reflects CME data as of December 21 , 2021.

CME Rate Hike Odds for December 2022 as of Dec 21, 2021 DETAIL

I added the last two columns to the CME data.

The over-under line for hikes is slightly more than three as betters see things. A sum of percentages shows a 53.7% chance of more than three hikes.

Moreover, there is a non-miniscule 17.2% chance of 5 hikes and a 24% chance of 5 or more if you think the betting line is correct.

I don't, and if you don't either, sophisticated investors might consider Eurodollar calls or futures (an interest rate bet not a currency bet).

Note: I did not price options, I am just speaking my mind. I have not traded eurodollar futures or options for a long time.