I created the above graph in Excel manually typing in numbers as there is no data download from CME FedWatch. 

Target Rate Probabilities for December 2023 

Weighed Average Example December 2023

Now Vs a Month Ago

• The market now sees a terminal rate of 5.36 percent in September, call it 5.25-5.50 percent.
• A month ago the market thought the terminal rate was 5.00 percent in June. 
• Previously, the market expected a peak in June followed by two or three 25-basis point cuts all the way to 4.32 percent. 
• The market now sees a a cut from 5.36 percent to 5.0 percent.

The market has gotten the Fed's message higher rates for a longer period of time.

However, the market is still expecting a bit more than one 25-basis point cut in December. 

Unemployment Rate Hits New Low of 3.4 Percent as Jobs and Employment Jumps But...

It was an allegedly strong jobs report that triggered belief in the Fed's stance of higher for longer. 

For discussion, please see Unemployment Rate Hits New Low of 3.4 Percent as Jobs and Employment Jump But...

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