From 59.5% to 30%: the week that derailed a September hike

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EL7 Research · Data Week 10–14 AugustUS monetary policy · Published 17 August 2026

قرص قياس ضخم لاحتمالات رفع الفائدة في سبتمبر ومؤشره يميل إلى الأسفل، أمام مبنى الاحتياطي الفيدرالي، وإلى جانبه عدّاد التضخم ومنحنى العائد لعشر سنوات ونتيجة تقويم الشهر. — September hike probability: **59.5% ← ~30%** 30-year yield: **5.27%** — higher than at the week's start S&P 500: third consecutive weekly gain Next: Warsh's first Jackson Hole speech — **28 August**
From 59.5% to 30%: the week that derailed a September hike

Last updated22 August 2026

Five sessions and four data points completely repriced the Federal Reserve’s path. Yet the long end of the yield curve closed the week above where it began, while inflation expectations rose rather than fell. What actually collapsed this week, and what remained intact ahead of the Federal Reserve chair’s first Jackson Hole speech?

Executive summary

Between the close on Friday, 7 August, and the close on Friday, 14 August 2026, the probability of a US rate hike at the September meeting implied by futures fell from about 45% to about 30%, after reaching 59.5% on 4 August before the jobs report. The decline came in three consecutive stages: a soft Consumer Price Index (CPI) reading on Wednesday (0.1%+ month on month), a flat Producer Price Index (PPI) reading on Thursday (0.0%), and then Friday, which directly affected the calculus, brought the largest decline in Retail Sales in more than a year (0.6%−), accompanied by an unexpected drop in Consumer Sentiment to 51.0.

But the other half of the picture did not change, and it is as central to this research as the decline in probability:

The 30-year Treasury yield ended the week at 5.27% — above where it began and exactly at its 31 July level, as though two weeks of “major news” had left the long end untouched.
One-year Inflation Expectations in the University of Michigan survey rose to 4.3%, while 5–10-year expectations remained unchanged at 3.3% for a third month — far from any definition of expectations anchored at the 2% target.
The probability of at least one hike before the end of 2026 remained around 63%. The market did not remove the hike; it deferred it.

The September hike therefore fell away, but the inflation debate did not. The next decisive event is not an economic release but a speech: Federal Reserve Chair Kevin Warsh’s first major address at the Jackson Hole symposium on Friday morning, 28 August.

Repricing timeline: September hike probability

Figure 1 — Repricing strip: probability of a September hike as reflected in 30-day Federal Funds Futures (30-Day Federal Funds Futures) via CME Group’s FedWatch tool. Points marked (~) are estimates derived from the market sources cited in the footnote, not official archived readings. The hollow circle represents Kalshi’s Prediction Market reading on the CPI release day, while the gap between the two readings forms part of the story.

Sources: CME FedWatch Tool and Kalshiel7.ai · 17 AUG 2026

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From 59.5% to 30%: the week that derailed a September hike

Executive summary

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