Fed funds futures priced about an 80 percent chance of a Federal Reserve rate increase at the Dec. 8–9 meeting after the Nov. 6 jobs report. That figure is from LSEG data, Reuters reported. It is a market price. It is not a Fed forecast.

Where the number comes from

The probabilities come from futures prices. CME Group's FedWatch tool shows the probabilities of rate moves at Federal Open Market Committee meetings "as implied by 30-Day Fed Funds futures prices," according to CME Group.

Traders buy and sell those contracts. Their prices imply an expected path for the policy rate. A tool converts that path into a probability for each meeting.

The result describes what traders are paying for. It does not describe what Fed officials have decided.

It changes with the data

The December figure moved three times in about a week.

The prior week, a December hike was priced at more than 80 percent, Reuters reported. On Friday, before the jobs report, it was about 70 percent. After the report, it was about 80 percent, according to LSEG data cited by Reuters.

The report itself was strong. Employers added 165,000 jobs in October, against 59,000 expected by economists polled by Dow Jones, CNBC reported.

Data is not the only input. "The tightening of US financial conditions could prove more important in deciding Fed policy action in December than today's NFP (nonfarm payrolls) report," Lee Hardman of MUFG said on Friday, Reuters reported.

Sources differ

LSEG and CME FedWatch each publish their own probabilities. Their figures can differ for the same meeting on the same day. CME asks media to attribute its figures to "CME FedWatch."

A probability means little without its source, its meeting and its timing. "About 80 percent, LSEG, after the Nov. 6 jobs report" says what was measured and when. "80 percent" alone does not.

The 70 percent and 80 percent readings above were taken before and after the jobs report.

What it means this week

The Fed raised rates in September. It was the first increase in three years. The Fed held rates in October.

The Bureau of Labor Statistics publishes the October consumer price index on Tuesday, Nov. 10, at 8:30 a.m. ET. It is the last inflation report before the December meeting. The probability can move again on the release.

Investors expect about two more quarter-point increases in this cycle in total, Reuters reported.

The same method applies abroad. Traders priced the chance of a European Central Bank hike in December at about 60 percent, down from 75 percent, Reuters reported on Nov. 8.

What it means for borrowers

An 80 percent probability leaves 20 percent on other outcomes. It is not a commitment.

The odds describe what traders expect. The Fed's decision at the meeting is what sets the target range. Until that meeting ends, the 80 percent is a price, not a decision.