The rate-setting meeting hasn’t even started yet, but the cards are already on the table.

To be precise, Kevin Hassett, a leading candidate for the next Fed Chair, suddenly came out late at night and called for a rate cut—this shout instantly ignited market sentiment. As for those big Wall Street banks? They pulled out last week’s research reports overnight, tore them up, and made revisions.

What’s the current consensus? A rate cut this week is all but certain.

**Bets are this extreme already**

The CME’s “FedWatch” tool shows traders are now betting there’s an 89.6% chance the Fed cuts rates by 25 basis points this week. The chance of no cut? Just over 10%. Even more dramatic: the odds of at least one more rate cut by next January are over 92%.

These aren’t guesses—they’re numbers voted on with real money.

**Institutions are collectively backtracking**

Banks that were saying “maybe hold steady” just last week have changed their tune faster than anyone:

J.P. Morgan and Morgan Stanley? Switched directly from “pause and observe” to “expect a 25 basis point cut.”
Nomura is even more extreme—this is their second forecast revision, not only confirming a cut this week, but also scheduling cuts for June and September next year.
Even Standard Chartered jumped from the “hold steady” camp to the rate-cutting side.

Why the sudden shift? Because November’s economic data was a slap in the face. Private sector employment shrank by 32,000 jobs—the sharpest drop since March. The market had hoped for job growth. The labor market can’t hold up; can the Fed really stay put?

**The real focus isn’t whether rates will be cut**

A rate cut is almost a done deal, but investors are watching two other things:

First, will there be internal discord? Reportedly, four hawkish officials might vote against the cut, and Governor Waller is even said to want a 50 basis point cut. Such divisions often impact market expectations more than the cut itself.

Second, what’s the roadmap for next year? Goldman Sachs’ forecast: after this cut, there may be a pause, then more cuts in March and June, ultimately bringing rates down to the 3%–3.25% range.

Hassett also hinted—Trump is about to announce “a bunch of good news,” and the 10-year Treasury yield “still has plenty of room to fall.” This sounds like a warning to the market—and maybe a hint there are more policy moves to come.

**In a nutshell**

A rate cut is no longer in doubt; the real suspense is just how divided the Fed is internally, and how Powell will outline the path forward tomorrow. The market is ready—now it’s just waiting to see how the show plays out.