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outlined by analyses from the CME Group ), the classic sequence remains: oil spikes, inflation jumps, the Fed hikes rates, the economy weakens into a stall or recession, and the Fed eventually cuts rates to restore growth
The CME FedWatch is based on Futures Contracts. This one is ZQU6. You can trade those at many brokers probably, at IBKR you just search ZQ and choose the month. The liquidity is very good. However, you can't just bet on a specific decision with the futures, you bet on average effective federal funds rate for the rest of September. It seems that based on the Polymarket predictions and my rough quick calculations the "fair price" of the contract is 96.2675 vs current mid point of 96.2638. ZQ has a multiplier of $4,167 per point so you can "arbitrage" about $15/contract. Subtract broker fees and Polymarket fees/slippage on thousands of contracts that you'll have to buy and you're left with maybe few bucks per contract. And also you have to fill all orders on Poly or you'll not be fully hedged so if there is low liquidity in the 50bps hike market for example then you're fucked. But you can do it if you want.
You can't, the hedge funds are already doing it to keep both markets in line, the difference is just the trading cost (and you couldn't do it as a retail investor anyway, you need to have an account with a FCM to trade CME futures) In fact, I've done this very trade many times (although trading prediction markets was a regulatory and compliance pain for institutional investors until very recently)
Fed Watch tool. From market rates. www . cmegroup . com/markets/interest-rates/cme-fedwatch-tool.html
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