October Fed hike odds slip to 11.5% even as crude jumps to $110 on the Hormuz strike

Crude jumped to a $110.48 session high on Tuesday after the tanker strike in the Strait of Hormuz, and October Fed hike odds went nowhere. On Polymarket the market for a 25 basis point increase at the October 28 meeting sat at 11.5 cents on Wednesday morning, while Kalshi's contract pricing a target of 4.00% or higher after the meeting traded near 13. If anything the oil shock underlined how little near-term rate risk the event markets are assigning: the no-change contract held at 88.5 cents, up from the 85.5% reading the desk recorded on October 20.

The setup deserves attention because it is a genuine divergence. A crude shock of this size, judged by the Tuesday session high of $110.48 on West Texas Intermediate, would historically be an inflationary push that tightens near-term rate odds. The event markets are not reading it that way. Polymarket's October decision market, where the 25 basis point hike leg traded at 11.5 cents with over $394,000 in 24 hour volume, has actually come down from the 36.5% peak the desk logged on October 14 after the September CPI print. The crude spike arrived roughly a week later and did not rebuild the position.

Related reading: Strait of Hormuz event markets after tanker strike: blockade-end odds climb to 13.5%.

Why crude is not feeding the October hike market

The simplest read is calendar. The Federal Reserve decision lands on Wednesday October 28, six days after the strike. Traders in these contracts are weighing a one week window against a supply shock that, so far, shows up harder in freight and diesel than in the near-term consumer inflation reading that would force a hike. Cost of living and commodities desks on this site documented the transmission: diesel climbed toward $6.276 a gallon on October 20 as the strike threatened the pump, while WTI cooled back below $100 in later trading. None of that moved the vote market for the October meeting.

Rates did respond elsewhere. The 10-year Treasury yield pushed toward the 5.14% area on October 20 as the long end extended, and the 3-month bill sat near 4.08%. That repricing is a real growth-and-inflation signal. What is notable is that the event markets chose to park the hike in December rather than pull it into October. Kalshi's December ladder still prices a roughly 83.5% chance the target closes the year at 4.00% or higher, matching the 10-19 reading the desk published. The October confrontation with 5.14% yields and $110 crude did not accelerate the timeline; it deferred it.

For the broader framework, see our Fed policy coverage.

Related reading: RBI Rate Hike Odds Resolve YES After October 7 Decision.

What the venue divergence says

Kalshi and Polymarket agree on direction but not on magnitude, and that is worth watching. Polymarket offered 11.5 cents on the October 25 basis point hike, while the Kalshi threshold contract that pays if the target is at or above 4.00% after the meeting traded near 13. The gap fits the structure: the Kalshi contract sweeps in any path that ends at 4.00% or higher, including a hike larger than 25 basis points, so it should sit a touch richer. Both venues priced a cut well below 1%, at 0.35 cents on Polymarket, so the asymmetry is intact. Nobody is paying for an easing at this meeting.

The resistance of these markets to an oil spike is the real news, and it is a statement about conviction, not about grades. A week before the decision, with a tanker strike in the Gulf and yields near 5.14%, the combined market still puts the chance of a hold around 87% to 88% and leaves the hike for December at roughly 83.5%. That is the prediction-market translation of a Federal Reserve that is expected to look through a supply shock in its final meeting before the decision rather than tighten into it.

Related reading: September CPI market: Kalshi 0.5% contract settles YES, October Fed hike odds jump to 36.5%.

Resolutions

No prediction-market rows worked by this desk reached their resolution date in this window, so there are no settlement lines to file.

The figures that matter are dated and sourced. Polymarket October no-change at 88.5 cents, 25 basis point hike at 11.5 cents and a 0.35 cent cut leg, all read on the morning of October 21 with the listed 24 hour volumes. Kalshi's October 4.00% threshold near 13 and its December 4.00% threshold near 83.5, pulled from the trade API on the same morning. WTI's $110.48 session high is the October 20 commodities desk print, with crude since easing below $100 in later trading. Whether the strike escalates is the swing input, and the event markets are telling you they will watch it through the lens of December, not of next week's meeting. The same way the odds moved after a CPI print, a fresh escalation that lifts gasoline into a durable range is the kind of leg that would finally start moving the October vote.

Related reading: Fed Rate Hike Odds Hit 83.5% for December as the 2-Year Backs the Move.

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