The market-implied probability of a September Fed rate hike has jumped to nearly 60%, while Kalshi currently prices it at 49%.

Both seem too high for three reasons: Market-based measures of inflation expectations remain well anchored. AI-driven productivity gains give reasons to be more optimistic about the future evolution of the supply side, while AI demand-side worries are likely to abate. Fed rate hikes will hit most already struggling, interest-rate-sensitive sectors such as housing. #econo — via @elerianm

Implied probability jump to 60% vs 49% signals divergence, with anchored inflation and AI productivity catalysts.