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Posted September 26, 2025 at 12:54 pm
The probability of a partial or full government shutdown beginning on Oct. 1 has risen steadily this week and now stands at 70%, a new high for this specific contract. As of this morning, there are no plans for the White House to negotiate with Democratic leaders. Members on both sides of the aisle are essentially blaming folks from the opposite party for failing to reach a timely solution.
Mamdani traded at the record of 86% again this morning after hitting the figure a few days ago while former state Governor Andrew Cuomo hovered at 13%. All other candidates are essentially off the board at this point, as the New York City mayoral race turns into a head-to-head election. Open contracts related to this contest are nearing 3.75 million as residents of the Big Apple prepare to vote on Nov. 4.
The Reserve Bank of Australia (RBA) has an 87% probability of pausing when it meets next week, according to IBKR ForecastTrader participants. But what’s odd is that the ‘Yes” contract asking if the institution will lower by 50 basis points (bps) or more costs $0.06; however, a similar instrument asking if the RBA will reduce by 25 bps is going for $0.03. That’s a mispricing that can occur in modern, new markets like ours, and the undervalued opportunity here is the “No” related to decreasing the benchmark by 50 bps or more. It’s costing $0.92 and would pay out a $1.00 if rates are lifted, left unchanged, or reduced by 25 bps. Furthermore, if the consensus move is a hold, then a reduction of 50bps or more shouldn’t have a greater likelihood than a trim of 25 bps. While a surprise 25 is possible, expectations generally don’t shift from steady to down 50 in a blink of an eye across central banks in developed nations.
Source for Images: ForecastEx
Note: Prices are highest bids as of the morning of September 26, 2025. Red circle around the threshold was inserted by J. Torres to highlight his preferred “No” answer.
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This material is from IBKR Macroeconomics, an affiliate of Interactive Brokers LLC, and is being posted with its permission. The views expressed in this material are solely those of the author and/or IBKR Macroeconomics and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
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