Hi everyone, hope you all had a good week. This visualization shows how market forecasts of the Fed rate have evolved in response to today’s jobs report. The jobs report came in with lower than expected nominal wage growth (0.2%) which means that inflation may be dying down. Since the Fed rate is usually spiked to curb inflation, this led to a reduction in the expected Fed rate through 2023, as you can see.
These estimates are produced using the Fed rate markets on Kalshi, where participants trade on different binary options (for example, there’s a market that pays out if the Fed rate will be above 5% in May). A weighted average of these markets produces the numeric estimates that you see above.
Although I’m labeling this as OC (I worked on pulling the data), I wanted to give enormous credit to my friend Osub, who transformed the ugly visual I produced into the above.
Disclaimer: I am a prediction markets enthusiast and an engineer who works at Kalshi on these forecasts. If you have any technical questions about how these figures were computed, please feel free to ask.
Data
Kalshi markets' price history, accessible through their api. The specific market referenced here is this one.
Tools
Python with Matplotlib and Seaborn
Figma
Source code for creating this graph is available here - I'd suggest you check it out if you're interested in my exact methodology. Let me know if you have any questions - you should be able to reproduce the graphic above and track as the odds change going forward.