Hike probabilities continued to dwindle

December is the focus of Fed hike talk and the odds that rates will rise are dwindling.

Based on the Fed funds effective rate, the chance of a hike is just 28.9% now, compared to 56% in early July. It's skidded lower since then as inflation numbers missed estimates and Congress failed to convince the market that any growth-positive actions are coming.

Looking out further, the December 2018 contract is also telling. It now shows a 27% probability that rates won't change at all over the next 16 months and only a 32% chance of two or more hikes. That's a major divergence from the dot plot, which prices in one more cut this year followed by three more in 2018.

Just five weeks ago, the market was priced for a 56% chance of two or more rate hikes by the end of 2018.

These numbers can change quickly but so many Fed members have said they want to see an uptick in the inflation numbers and it just isn't coming to fruition.