Key Highlights

  • Friday, October 23, 2026 estimates placed a December quarter-point increase near 71% in one measure and about 80% in another.
  • Less than 10% probability was assigned to an increase on Wednesday, October 28, after the September 16 move to 3.75% to 4.00%.
  • A research firm expects a December increase to 4.00% to 4.25%, while official projections show one 2026 hike and four officials anticipate 50 basis points by year-end.
  • Two employment reports and one inflation release remain before December, leaving substantial room for the probabilities to change.

How Much of December's Possible Increase Is Embedded in SHV?

The SHV fund (NASDAQ:SHV) owns securities with about one year or less remaining, so its income adjusts quickly as expectations for policy change. On Friday, October 23, 2026, futures put the likelihood of a December quarter-point increase near 71%; a separate futures-derived estimate was about 80%.

Multiplying those probabilities by a 25 basis point move gives approximately 18 to 20 basis points already reflected in yields. This is arithmetic based on reported odds, not a forecast of the eventual level.

The contrast with this week is large. Probability of an increase Wednesday, October 28 was under 10%. The Fed last acted Wednesday, September 16, taking the range to 3.75% to 4.00% in its first change since 2023.

Why Do Expectations Affect Income More Than SHV's Price?

Bills mature within months and consequently have little sensitivity to changing rates. Their prices tend to move modestly, while proceeds from maturing holdings can be reinvested rapidly at prevailing yields.

Securities extending beyond the December meeting already offer income influenced by the possible increase. Confirmation would add only the portion not yet embedded. Conversely, guidance favoring a pause would remove some of the priced 18 to 20 basis points and lower yields on those maturities.

A research firm expects no move this week, then a December quarter-point rise to 4.00% to 4.25% followed by an extended hold. The latest official projections contain one hike in 2026, and four policymakers foresee 50 basis points by year-end.

What Could Move the 71% to 80% Probability Range?

A hawkish press conference on October 28 could send the estimate toward certainty. Soft employment or inflation figures could instead pull it beneath 50%. Two jobs reports and one inflation report remain before the December gathering.

September core consumer prices increased 0.3% from August, and crude above USD 100 sustains inflation risk. Different calculation methods and observation times explain why futures-derived estimates range from 71% to 80% rather than matching exactly.

The relevant exposure is therefore a revision in expectations, not merely the rate change that most of the curve already anticipates. Futures probabilities are forecasts and can move abruptly.

Because the portfolio continually replaces maturing bills, changes in yield reach investors gradually through distributions rather than through a large one-day price adjustment. That distinguishes this exposure from longer Treasury funds. It also explains why the sequence of jobs and inflation releases matters even if the October decision itself contains no surprise. The reinvestment process repeats as each security matures, so the income effect unfolds over the following months rather than arriving all at once.

What to Watch Next: Can October 28 and 29 Reprice December?

Kevin Warsh's Wednesday, October 28 press conference provides the first test. GDP and PCE inflation are released Thursday, October 29, followed by the remaining employment and inflation reports before December.

Those inputs will determine whether the fund reinvests at yields consistent with a hike or at lower levels if the odds recede. The present range leaves room for movement in both directions, Nothing in this article constitutes investment advice.