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TL;DR:
- Markets are coalescing around expectations of modest rate cuts starting in September, as economic signals point to a cooling yet resilient landscape.
- Tight alignments between Kalshi and Polymarket underscore unified sentiment on near-term Fed moves.
- October outlooks suggest a continuation of easing trends, with subtle variations in platform volatility highlighting potential reactions to interim data releases.
- By December, cumulative policy shifts gain traction in market probabilities, painting a picture of adaptive monetary strategy amid year-end uncertainties.
- Q3 GDP expectations reflect tempered growth optimism, intertwining directly with rate decisions—where weaker projections could accelerate easing paths.
- Traders can leverage these interconnected insights to hedge against policy pivots, informing positions in bonds, currencies, and growth-sensitive assets.
📈 Market Snapshots
September
October
December
US GDP growth in Q3 2025?
🌎 Event Breakdown
Fed Interest Rate Decisions Through 2025: As traders brace for potential shifts in monetary policy amid evolving economic data, the Federal Reserve's upcoming decisions in September, October, and December 2025 loom large. Prediction markets on Kalshi and Polymarket reflect crowd-sourced wisdom on Fed actions, often reacting faster than traditional forecasts to incoming news like labor reports or inflation prints. Notably, they intertwine with broader indicators such as Q3 2025 GDP growth expectations, where a softer economy could amplify odds of aggressive rate cuts to stimulate activity, while robust growth might temper easing expectations and bolster dollar strength.
This analysis breaks down the key markets, highlighting Kalshi-Polymarket alignments and divergences, volume distributions, and cross-market relationships to help traders hedge policy risks and capitalize on mispricings.
September Fed Interest Rates
The September Fed decision markets show a consensus leaning toward modest easing, with Kalshi and Polymarket maintaining a remarkably tight relationship in their probability trajectories over the past month.
Probabilities for a 25 bps cut on Kalshi (76%) have trended slightly downward from mid August peaks, mirroring Polymarket's (78%), suggesting unified market sentiment amid recent soft jobs data and cooling inflation signals. Divergences are minimal, with Kalshi slightly more optimistic on no-change scenarios (19%) compared to Polymarket's (18%), possibly reflecting platform-specific liquidity dynamics or user bases.
Volume distribution underscores this, with the largest shares allocated to no hike on Kalshi (24.4%) and hikes greater than 25 bps on Polymarket (20.4%), indicating concentrated bets on status quo versus aggressive hikes.
These insights may be useful for front-running bond market reactions— a higher probability of cuts could pressure 10-year Treasury yields lower, offering opportunities to long duration-sensitive assets or short the dollar against haven currencies like the yen. The tight Kalshi-Polymarket spread minimizes arbitrage risks, allowing confident cross-platform hedging. Linking to Q3 GDP markets, if GDP expectations skew lower, September cut odds could surge, as weaker growth amplifies recession fears and prompts preemptive Fed action. Conversely, upside GDP surprises might compress cut probabilities, favoring shorts in rate-cut beneficiaries like tech stocks.
October Fed Interest Rates
October's Fed markets reveal a subtler evolution, with Kalshi and Polymarket displaying broader alignment on easing paths but notable differences in volatility.
The chart illustrates Polymarket's (49%) for a cut of 25 bps holding relatively steady after mid-August dips, while Kalshi's equivalent (49%) shows sharper fluctuations of late, potentially due to less volume.
Traders can leverage this for sequential policy bets: if September delivers a cut, October probabilities could cascade higher, impacting SOFR futures and enabling calendar spreads in rates. Differences between platforms highlight arbitrage plays—Polymarket's smoother curves might appeal for longer holds, while Kalshi's lower volume markets suit news-responsive strategies.
Tying into Q3 GDP, October markets appear more sensitive to growth outlooks; Polymarket's elevated 5% for cut >50 bps implies that subpar Q3 GDP prints could accelerate cumulative easing expectations. This relationship aids in macro positioning, such as pairing GDP downside bets with October cut longs to hedge against a dovish Fed pivot that weakens the USD and boosts emerging market equities.
December Fed Interest Rates
By December, the markets project a cumulative easing trajectory, with Kalshi and Polymarket converging on higher cut probabilities amid longer-horizon uncertainties. The price history shows both platforms ramping up (76% for 25 bps cut on Kalshi), though Polymarket exhibits milder swings (61%).
Key similarities include near-zero odds for hikes across the board signaling market dismissal of reacceleration risks. Slight divergence emerges in aggressive cut bins—Kalshi's 6% for cut >25 bps lags Polymarket's 7% for >50 bps cut, indicating varying appetites for tail risks like a year-end recession. Keep in mind, there is significantly less volume on Kalshi for December markets.
US GDP Growth in Q3 2025
Q3 2025 GDP markets paint a picture of tempered optimism, with Kalshi and Polymarket differing in bin granularity but aligning on a modal expectation around moderate growth. Kalshi's chart shows 78% for above 1.0%, with steady declines in higher bins like 6% for above 3.5% since late July, reflecting incoming data like retail sales misses.
Polymarket has 18% for 2.0%-2.5% prominent, but its trajectories show more volatility—24% for <1.0% spiked mid-August before slightly easing. Similarities include overall downtrends in upside probabilities, underscoring shared views on slowdown risks; differences arise in low-end tails, where Polymarket's 21% for 1.0%-1.5% outpaces Kalshi's Above 1.0% and 1.5% categories.
Volume distribution highlights concentration in 22.6% for above 1.0% and 16.9% for Above 0.0% on Kalshi, signaling robust liquidity for core scenarios.
Traders may find utility here for economic cycle plays: softer GDP odds can inform shorts in industrials or longs in defensives, while cross-referencing with Fed markets reveals policy feedback loops. For instance, if Q3 probabilities cluster below around 2.5%-3.0%, this bolsters September-October cut expectations, creating opportunities for correlated trades like shorting bank stocks amid lower rate environments. Ultimately, these markets can potentially help act as leading indicators for Fed decisions—if growth surprises high, rate cut odds across all meetings could compress, favoring curve steepeners; conversely, downside skews amplify easing paths, enhancing convexity in options strategies tied to policy uncertainty.
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These interconnected markets equip traders with a dynamic toolkit for navigating 2025's policy landscape. Tight Kalshi-Polymarket correlations in Fed decisions contrast with GDP's nuanced divergences, but the overarching theme is caution. Traders should monitor incoming data for shifts, using these insights to build resilient portfolios against economic volatility.
Check out and fork our Fed Interest Rate Decisions Through 2025 and US GDP growth in Q3 2025 Observable Notebooks.
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❓Questions we asked
Follow the Adjacent community on Metaculus here!
- U.S. real GDP growth in 2025?
- Will the yield on 10-year U.S. Treasury notes exceed 5% for at least one month in 2025?
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