MediumIV Macro Policy & Sovereign Debt30 October 2026, Friday

Logan calls for at least two more hikes as December odds slip to 76%

Dallas Fed President Logan said on 30 October that the FOMC should raise rates by 25 basis points at least twice more. According to CNBC, citing CME data, futures put the probability of a hike on 8–9 December at about 76%.

Location: DALLAS

Logan votes in December. She added that skipping a meeting does not change the destination, and that pausing to assess after two hikes would make sense. Musalem, who has no vote until 2028, said further tightening would soon be needed. Barkin said the direction was clear and the question was pace. Cook and Hammack had dissented in favour of a hike on 28 October, when the Fed held at 3.75–4.00% in a 10–2 vote.

The hawkish rhetoric does not rest on wage data. The employment cost index (ECI, which measures employers' total labour costs) rose 0.8% in the third quarter, after 0.9% the previous quarter. The annual increase was 3.4%, with wages at 3.1% and benefits at 3.9%. Wages trailed September's PCE inflation of 3.6%. The constraint is not a wage spiral but the lengthening period of inflation above 2%.

The market focused on a different risk that day. Results from Amazon and Intel raised doubts about AI spending; the Nasdaq Composite fell 2.86% and the S&P 500 1.82%. The 10-year yield held at 4.93%, near a seven-week low, and the two-year yield fell about 6 basis points. The probability varies by source: FatTail calculated 77.3% for Thursday's close and 68.4% for Friday morning, while our previous entry had 85%. The Treasury will publish its borrowing estimate on 2 November and its refunding plan on 4 November.

Talay assessment

Bottom line

At the Fed the debate has moved from direction to pace, but the market does not treat December as certain. An AI-driven equity sell-off is pulling yields down and tightening financial conditions, partly doing the Fed's work for it. The most likely path is a 25 basis point hike in December, but that path depends on the October jobs data and on whether the equity sell-off persists.

Likely effects

US front-end yieldsUncertainWeeks
Logan's framing of at least two hikes puts a floor under the two-year yield; if the equity sell-off deepens, safe-haven demand tests that floor.
Treasury financingUncertainWeeks
The 10-year yield easing to 4.93% gives the Treasury breathing room before the 2 and 4 November announcements, but a change in coupon-size language could lift the term premium again.
AI investmentNegative1–6 months
If spending doubts grow while financing costs rise, tech investment slows; this channel could reduce both inflation and the need for hikes.
TürkiyeNegativeWeeks
A Fed hike keeps dollar funding costs elevated; the December decision becomes a threshold to watch directly for Türkiye's external borrowing and the lira.

Possibilities, ranked

1
25 basis point hike in December65%
October jobs and CPI data sustain momentum, and the majority hikes despite the equity sell-off.
Watch: October payrolls and CPI; the 8–9 December FOMC
2
Fed skips December for January25%
The equity sell-off deepens or employment weakens, and the Fed waits one more meeting.
Watch: Continued Nasdaq selling and unemployment rising above 4.2%
3
Dissents turn more hawkish10%
Energy prices rise again and the debate shifts to 50 basis points or back-to-back hikes.
Watch: The January Brent contract and inflation expectations further out the curve

Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.

Market reaction

Indicators affected

US 10-year▼ 4.93%
December hike probability▼ ~76%
ECI (12-month)▲ 3.4%

Historical context