Nobody is talking about this Fed pivot Preview: And the Fed Watch tool is the proof.

The financial media is wrong about the Fed.

Pull it up yourself. The CME Fed Watch tool shows the live probability of every possible Fed rate decision based on what the futures market is actually pricing in, and seven months out, the probability of a rate hike is higher than the probability of a rate cut. 

That is not what you are hearing on television, and it is not what the consensus is telling you.

The next three meetings are not the story. The Fed is not going to move in June, July, or September, and the hold is priced in. Everybody knows it.

The story is what is happening further out on the curve.

A few weeks ago, the conversation was about how many cuts the Fed was going to deliver in 2026. The administration was publicly pressuring Jerome Powell to lower rates faster, and every commentary deck on financial television had a slide pricing in the next three cuts. The futures market was on board.

Then the market kept ripping higher.

Here is the dynamic nobody is connecting. 

When the market overheats, the wealth effect feeds back into the real economy. People who have money in the market right now feel rich, and that feeling translates into spending, which translates into prices going higher.

That is how inflation comes back, not through gas prices or supply chains but through asset prices pulling consumer behavior with them.

The Fed sees this. 

The Fed Watch tool reflects what serious traders with real money are doing about it.

You may hear it directly from the Fed soon. 

There is a real possibility that Fed officials start talking publicly about throwing some warning shots across the bow if the market does not cool off on its own, which would be a complete inversion from the conversation that was happening a few weeks ago. 

The administration was demanding cuts, and the Fed may now be forced to talk about hikes.

If that happens, the entire structure of this rally has to be repriced. Everything that has been working has been working because cuts were assumed, and stocks sensitive to rate expectations, long-duration assets, and anything that benefits from cheaper money rebuild themselves if the conversation flips.

You do not need to call the top to prepare for it. 

You need to know what is being priced into the market versus what is being talked about on television, and right now those two pictures are not the same.

If you want to talk through how we are positioning for this at TheoTrade, the chatroom is where we work through these setups in real time every trading day. 

You see the trades as they happen, you hear the reasoning, and you can ask questions and get real answers from traders who have been doing this for thirty years.

CLICK HERE TO JOIN THE THEOTRADE CHATROOM 

To your success,

Don Kaufman