Bond Market Prices 60% Chance of Fed Rate Hike
Bond markets continue to price in a 60% probability of a Federal Reserve rate hike at the upcoming FOMC meeting, contradicting Governor Waller's recent calls for patience. This stance is reinforced by strong growth data, with the Atlanta Fed’s GDPNow model estimating Q3 growth at 4.7%, and energy prices nearing key resistance levels.
Per GN auto markets/bonds: treasury yields, Waller explicitly stated he would support holding rates steady if data confirms disinflation, but cautioned that a hike remains appropriate if August reports show the improvement was temporary. Additionally, the two-year Treasury yield is trading near 4.36%, reflecting a 73-basis-point premium over the current effective funds rate, while Brent crude approaching $100 adds further pressure on inflation expectations.
Source: GN auto markets/bonds: treasury yieldsFederal funds futures indicate a 60% probability of an interest rate increase at the next FOMC meeting. This shift contradicts recent commentary from Fed officials urging patience.
Source: GN auto markets/bonds: bond market
