Fed Rate Hike Probability & CPI Inflation Simulator

Scenario Calibration Macro Baseline 5.25%

Core CPI MoM Print Forecast +0.35%

Consensus consensus is ~0.20%. Hot print threshold is ≥ 0.35%.

Labor Market Strength Index 75 / 100

Composite index reflecting non-farm payrolls, quit rates, and wage growth.

Fed Watch Baseline Hike Probability 50.0%

Pre-print market implied pricing (roughly 50-50 per Northwestern Mutual).

Current Effective Fed Funds Rate 5.25%

Benchmark upper target rate prior to upcoming FOMC decision.

FOMC Policy Probability Matrix High Hike Risk

72.5%

High Hike Risk

Projected Terminal Rate

5.50%

2-Year Treasury Yield Shift

+0.18%

Asset Class Shock Sensitivity

Asset / Benchmark	Projected Shock	Directional Catalyst
S&P 500 Index	-1.85%	Multiple compression on elevated discount rate
US 2-Year Treasury	+18 bps	Direct hawkish Fed re-pricing
US Dollar Index (DXY)	+0.68%	Widening transatlantic rate differentials
Fed Stance Stated Risk	Hawkish Tilt	Hot MoM Core inflation forces Fed's hand

Matt Stucky Thesis: At 0.35% MoM Core CPI and elevated labor strength (75), standard Taylor rule divergence indicates inflation is re-accelerating beyond the 2% annualized band. Fed policy moves from pause to an active 25 bps hike.