What are traders thinking about a December hike?

From the CME's Fed Watch Tool:

FedWatch Tool

Based on CME Group 30-Day Fed Fund futures prices, which have long been used to express the market’s views on the likelihood of changes in U.S. monetary policy, the CME Group FedWatch tool allows market participants to view the probability of an upcoming Fed Rate hike.

This is the most bullish traders have been in some time.  So despite the consistent Fed statements and inconsistent Open Mouth Policy, the market has given a high probability (77.5%) to an increase.  However, there remains a 22.5% chance that the Fed may not raise rates.  

The reality is the increase is very unlikely to make a difference in economic activity.  So why all the fuss?  The Fed needs to keep interest rates low for a long time to reduce debt.  In order to reduce debt, the Fed needs inflation.  It also needs to keep market participants guessing about the future.  If not and most market participates concluded that the Fed was going to keep rates low for a very long time, then expectations can get away from the Fed.  This would likely unleash a significant boom and the Fed would have to put on the breaks.  This, from a debt perspective, would be disastrous.  

To conclude, a lot of time and drama has been spent on what would be a 25BP increase.  The Fed has certainly achieved its goal maintaining very low interest rates and tempered expectations about the future, whether interest rates increase or not.