Despite pressure from the White House for the Federal Reserve to reduce interest rates at its next meeting in May, our IBKR Forecast Trader prediction market expects a hold with a high degree of confidence. Indeed, next month’s Fed Funds contracts point to an 86% chance of a May pause. Central bank officials have recently expressed caution on stepping lower due to a possible inflationary uptick from the trade war.
Three Cuts in 2025
Looking to year-end, however, our market projects approximately three traditional 25-basis point cuts from the Fed, bringing the key benchmark from 4.375% in the present to 3.625% by the December 10 meeting. Meanwhile, there’s a 36% chance of four cuts or more this year, and a 43% probability of two or fewer cuts. Furthermore, there’s a 7% chance that the central bank will hike to a level higher than the current 4.375% by year-end.
San Antonio Looks Like a Runoff
South of Washington, San Antonio, Texas, has a mayoral election on May 3. But if none of the 27 candidates secure at least 50% of the votes, then another election will occur between the top two contenders on June 7. Incumbent Ron Nirenberg is ineligible to run due to him serving 4 2-year terms, hitting the 8-year total limit. Gina Ortiz Jones is the favorite in our marketplace, sporting a 40% chance of victory. John Courage and Beto Altamirano are second and third and are among the three candidates with odds above 10%. Moreover, it looks like voters will need to hit the booths again in June to decide between Ortiz Jones and Courage. The winner is scheduled to serve a 4-year term after Proposition F, passed in 2024, changed mayoral term limits from 4 2-year terms to 2 4-year terms.
New Mayor for Pittsburgh?
A closer democratic primary race is occurring in Pittsburgh, Pennsylvania, with elections on May 20. IBKR Forecast Traders expect Corey O’Connor to replace current mayor Ed Gainey as the Democrat contender. O’Connor ranks number one at the moment with a 48% chance of victory while Gainey is at 35%.
Packed Week of Contract Settlements
We have a busy week of forecast contract expirations, with Singapore and Hong Kong’s consumer price indices, new home sales, median new home prices, initial unemployment claims, consumer sentiment and more on deck for settlement.
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