Bond Traders Fully Price In 25-Basis-Point Fed Hike by End-2026 After Waller Comments
Updated
Updated · Bloomberg · May 22
Bond Traders Fully Price In 25-Basis-Point Fed Hike by End-2026 After Waller Comments
7 articles · Updated · Bloomberg · May 22
Interest-rate swaps on Friday moved to fully reflect at least one 25-basis-point Fed rate increase by the end of 2026, signaling a sharp shift in market expectations.
Christopher Waller drove that repricing after saying the Fed should make clear its next move is just as likely to be a hike as a cut.
The move suggests traders increasingly believe incoming Chair Kevin Warsh would need to act quickly against inflation rather than deliver the easing path markets had previously favored.
That turn in rate bets points to a broader reassessment of the Fed outlook for 2026, with bond markets now assigning meaningful odds to tighter policy instead of lower rates.
The new Fed Chair once favored lower rates. Why is the market now betting on a hike to combat stubborn inflation?
With the Fed deeply divided on its next move, what key factor will ultimately determine the future of US interest rates?
Global conflicts and tariffs are fueling inflation. Can the Fed’s interest rate tools truly tame these external price pressures?