The week ahead: Fastballs, forecasts, and the Fed

Good afternoon, traders.

We hope that your weekend was enjoyable and you were able to get some R&R, whatever that may look like.

This week is exciting for a lot of reasons. The World Series kicked off last Friday and will be continuing with Game 3 being played tonight at Tropicana Field. Additionally, the Fed is making their second to last interest rate decision for the year on Wednesday.

And last but not least, the midterm elections are just eight days away. This should excite everyone because no matter what side of the political aisle you're on, watching TV without ads constantly telling you how the other side will end the world is nice.

But first, some big Kalshi news.

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The agreement restricts league and team personnel from trading NBA event contracts and builds on the safeguards we already have in place, including market surveillance through IC360, athlete protection through Signify, and nationwide self-exclusion. We see this as a model for how leagues, exchanges, and regulators can work together to build a fair, open marketplace that fans can trust. Click here to read the full announcement.

Now, on to this week’s markets.

The Pro Baseball Champion market has seen some considerable action. Over the weekend, Milwaukee took a 2-0 lead in the World Series winning both of the first games by one run each.

Contrary to what the series score may lead you to believe, the games have been very competitive so far. In the first game, which Milwaukee won 3-2, Jacob Misiorowski only allowed one run in 5 innings and set the fastest recorded pitch in World Series history with a 103.5 mph fastball. Tampa Bay had the bases loaded in the ninth inning but were unable to complete the comeback.

In Game 2, Tampa Bay was up 4-0 in the first inning but Milwaukee was able to come back, with the go-ahead run scored in the seventh. This has set the stage for Game 3 tonight which traders seem to believe could go either way.

Milwaukee has now won seven games straight, including their sweep of the Dodgers. The team has been able to come back from behind repeatedly, which helped them immensely in Game 2. Tampa Bay, on the other hand, has struggled to close out innings and being 2 games down, they'll need to turn things around quickly. 

Another win for Milwaukee tonight would put them one game away from their first championship. A win for Tampa Bay tonight however could give them momentum that would carry into Games 4 and 5, both of which would take place at home.

Traders have the odds of a Blue wave this year at ~85%. Though used diversely in political conversations, as defined on our markets, a blue wave occurs if the Democrats hold 218 or more seats in the House after the 2026 midterms and Democrats hold 49 or more seats in the Senate after the 2026 midterms. 

With traders placing the odds of a blue wave so high, it’s worth looking at the races potentially driving this number up.

The first race concerns the Michigan Senate Race. Democrat Abdul El-Sayed and Republican Mike Rogers were close in margin but since early August 2026, the spread has widened in favor of El-Sayed. El-Sayed is campaigning on Medicare for All and highlighting Rogers' ties to President Donald Trump. Rogers on the other hand is positioning his campaign on rising cost of living and the hits Michigan's manufacturing industry have taken, that he attributes to failed federal policy. 

In another contested race, the Kansas Senate winner market has seen substantial change in the past couple of weeks.

While traders forecasted Roger Marshall with a 95% chance of winning at the start of 2026, that favor has fallen to 62%. Economic issues are at the forefront of many Kansas voters as the state relies on agriculture and farmers have seen increased prices in fuel, fertilizer, equipment, and labor shortages from immigration enforcement. Marshall is backed by Trump, who threw a rally supporting Marshall a week ago, whereas Hamilton is a senior pastor at the largest United Methodist congregation in the United States and is campaigning on healthcare and living costs.

Similarly to Kansas, traders have also repriced the Texas Governor winner market. Earlier in 2026, Republican incumbent Greg Abbott's odds were at a 90% chance but have since fallen to 70%. The Lone Star state has long been a red stronghold, and traders predict Abbott will remain in office, but the rise of Democrats in the state like James Talarico who traders are favoring in the Texas Senate race are also likely contributing to the odds of a Blue wave.

The Federal Reserve's October decision on whether interest rates will be hiked, cut, or maintained will be made this Wednesday. 

The Federal Reserve is responsible for setting and adjusting monetary policy in the United States and is tasked with keeping inflation low and employment high. This is done by setting interest rates, or the cost of borrowing money for consumers and businesses.

Traders are forecasting a 93% chance that the Fed will maintain the current rate. At the September 2026 meeting, the Fed raised interest rates 0.25% or 25 basis points, marking the first increase in 3 years. The decision came primarily due to inflationary impacts driven by the rising cost of energy.

The September 2026 CPI demonstrated a YoY increase at 3.7%, up from 3.4% in August. Gasoline prices jumped 9.1% in a single month, and the labor market slowed with only 29,000 jobs being added in September. 

This creates a difficult balancing act where a rate hike would help bring down inflation but could also weaken employment numbers and economic growth. Maintaining the current rate, however, gives the Fed more time to see whether the rate enacted in September 2026 is having the positive effect they want it to.

Although the expectation amongst traders is that rates will stay the same in October, many will be listening to Fed Chair Kevin Warsh's remarks following the announcement of the decision as there is one more decision to be made in December.

Follow Jack Kuveke at Jabroni Capital
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