Warsh Forward Guidance: Hike Odds Hit 60% on CPI, Then 16%

FOMC Alerts · October 27, 2026

Warsh forward guidance, in short: the Fed chair says he won’t tell markets in advance what the committee will do. Traders kept trading what his colleagues said anyway. Over four weeks, the odds of an October rate hike fell from 72% to 20% across three Fed speeches. They jumped to about 60% when September CPI came in hot, closed that day at 32%, then slid to 16% after Warsh spoke in Bangkok (our calculation from fed funds futures using CME’s method). The data leaned toward a hike; the pricing followed the Fed’s language.

Wednesday tests that gap: the statement is out Wed Oct 28 at 2:00 PM ET, and Warsh’s press conference starts at 2:30 PM ET. There are no new projections at this meeting.

What did Warsh say about forward guidance?

He said he isn’t in the business of pre-committing. At a fireside chat with IMF Managing Director Kristalina Georgieva during the IMF annual meetings in Bangkok (10:30 to 11:00 AM local time on Fri Oct 16, which was 11:30 PM to midnight ET on Thu Oct 15), Warsh said he doesn’t prejudge meetings or say in advance what he might do at the ones left this year. Then he summed it up: “It’s a new chapter at the Fed, and we’re not in that business anymore.” (per Bloomberg).

The awkward part is that other officials had spent the previous weeks signaling. Markets read Warsh as no pushback against a hold. Kalshi’s October-hike contract, a prediction market, fell from 0.30 to 0.19 in the hour that ended at midnight ET and was at 0.11 by 11 AM ET on Oct 16. Our futures-based odds went from 28% at the Oct 15 settle to 16% on Oct 16, and the 2-year Treasury yield eased from 4.77% to 4.74% (U.S. Treasury). Per Bloomberg, he did nothing to lean against the no-move pricing beyond restating the Fed’s price-stability commitment.

How did Fedspeak move the odds? Williams, Jefferson, Waller

The biggest drops in October hike odds came on the days of Fed speeches, not data releases. Our odds use November fed funds futures against the effective fed funds rate (3.88%, FRED), so they move in steps of about 4 points.

Futures: our calculation (November contract vs EFFR; latest row uses CME’s method). Kalshi: hourly prices, October 25bp-hike contract.

Williams, Sep 29. The New York Fed president said one more increase in the target range may be appropriate late this year if the economy tracks his forecast. Late this year left December open, and October odds fell from 72% to 48% that day. Bloomberg put it at about 70% to about 50%.

Jefferson, Oct 1. The vice chair said policymakers would need to reach their own judgment and that it could take more time. Our odds hit 24% (Bloomberg: toward 25%), and the 2-year fell 10bp, from 4.88% to 4.78%. Caveat: Kalshi started sliding around 11 AM ET, before the speech’s 1:30 PM ET listing, so other news may have played a part.

Waller, Oct 8. The governor said hikes don’t have to come at back-to-back meetings, as long as they’re in place within an acceptable period. Bloomberg says that cemented the outlook, but nothing visible moved: futures odds were already 20%, and Kalshi traded flat all day.

Timing isn’t cause. Each drop lines up with a speech, but bonds were selling off hard into late September and other headlines moved rates too. The pattern fits traders taking cues from Fed speakers; it doesn’t prove each speech did the work.

Why didn’t the hot CPI hold October hike odds?

The likeliest reading, and Bloomberg’s: Fed language had already set expectations, and core inflation didn’t add fuel. BLS said September CPI rose 0.6% on the month, the fastest since April and up from 0.4% in August, and 3.7% over the year. Gasoline jumped 9.1% and made up more than half of the monthly rise. Core CPI rose 0.3%, the same as August, and 2.6% over the year.

The release hour still moved a lot. Kalshi’s hike contract went from 0.19 to 0.48 between 8 and 9 AM ET on heavy volume (221,440 contracts) and peaked at 0.55 the next hour. November futures hit 95.97 at the low, about 60% hike odds in our math. By the close they were back to 32%, and the 2-year still finished 3bp higher at 4.82%.

Per Bloomberg, TD Securities’ Gennadiy Goldberg had told clients that morning to bet against an October hike. As the odds jumped, his team debated dropping the trade, and the move reversed before they could act. Ed Al-Hussainy, a portfolio manager at Columbia Threadneedle, told Bloomberg the data fits a hike: “The only thing that is standing between a hike and a hold is this Fed language.” Nationwide’s Kathy Bostjancic told Bloomberg she thinks the odds should be closer to a coin flip.

Where do October hike odds stand now?

Low for October, high for December. Our calculation from fed funds futures using CME’s method puts a hold on Wed Oct 28 at 91.1% and a 25bp hike at 8.9%. By the December meeting, the odds that the range is above the current 3.75% to 4.00% are 79.1%: 72.3% for one 25bp hike and 6.8% for two (20.9% no change). These are from quotes taken about 9:19 PM ET on Tue Oct 27. Per Bloomberg, swaps put October below 15% as of Sun Oct 25. The 2-year closed Tue Oct 27 at 4.70% and the 10-year at 4.99% (U.S. Treasury).

October is priced as a hold, December as a hike, and Warsh says he won’t confirm either in advance.

What is the whipsaw risk at the Warsh press conference?

History says it’s higher than usual. Neil Dutta, head of economics at Renaissance Macro Research, told Bloomberg there’s a disconnect between what Warsh has said and what other officials have signaled, and that a split like that leaves markets open to a whipsaw at any meeting.

Our whipsaw test: an SPX intraday range of at least 1% of the prior close, with a close-to-close change no bigger than a third of that range. From January 2015 through Oct 14, 2026, 15.6% of FOMC days with a press conference qualified (12 of 77), against 9.6% of days with no FOMC decision (275 of 2,870). Sep 16, the day of the hike, was one: SPX closed down 0.45% on a 1.57% range. CPI day, Oct 14, was not. SPX fell 1.11% on a 1.23% range, a trend day. All of this is our calculation from Cboe, FRED and Yahoo daily data.

Ranges have also run further than options priced. Since Cboe launched VIX1D in April 2023, the median FOMC-day SPX range was 1.42 times the move implied by the prior evening’s VIX1D, against 1.28 times on other days (28 FOMC days vs 845 others). The range reached twice the implied move on 14.3% of FOMC days and 11.1% of other days. Small sample, descriptive, not a forecast, and daily data can’t separate the 2:00 statement from the 2:30 press conference.

What does this mean for SPX 0DTE on Fed day?

• Energy: The scheduled risk is 2:00 and 2:30 PM ET Wednesday, and the variable is the language, not the decision. A hold is about 91% priced (our calc). Anything that reads as December guidance, or a flat refusal to give any, could reprice December (about 83% priced for a hike).
• Premium: Let VIX1D set the price. Know the expected move going in, and expect Fed-day ranges to stretch it.
• Structure: A whipsaw can tag both sides before settling. If you’re short premium, keep it defined-risk, such as an iron condor with max loss known before entry, and size so a tag of either wing is survivable.
• Plan, don’t predict: Write both scenarios down before 2:00 ET, with the FOMC implied move for each expiry in hand: Warsh leans against December pricing, or he declines to guide at all. We aren’t predicting which. Next data: Sep PCE and Q3 GDP, Thu Oct 29 at 8:30 AM ET.

What comes after Warsh’s October press conference?

This one ends Wed Oct 28, with the statement at 2:00 PM ET and Warsh’s press conference at 2:30 PM ET. The next FOMC meeting after that is Dec 8-9, with new projections, and it’s the meeting the December odds above are pricing. Every remaining date is in our FOMC meeting schedule 2026.

Related reading: How fed funds futures turn into rate odds · FOMC Alerts hub · All FOMC Alerts coverage

Trade it with structure

Observer is a six-week trial and training program: train with Coach for $17/week. You get everything a full coaching member gets, every week, and the six weeks are designed to install pro trading habits: courses on strategy, process and risk management, live daily coaching, a Discord trade room with hundreds of experienced traders, and the platform (heatmap, GEX tools, risk graph, position analyzer and journal). Start Observer.

Educational content, not investment advice. Options involve risk and are not suitable for all investors.