Bond traders are pricing in more than a one-in-three chance of a Federal Reserve interest rate hike at the upcoming FOMC meeting. The current fed funds target range stands at 3.50% to 3.75%, with futures-implied probabilities for July in the mid-30% range. The 2-year Treasury yield is around 4.25%, reflecting market recalibration of short-term interest rate expectations. Prediction markets show a notable decrease in the likelihood of a « Pause-Pause-Pause » strategy for the next three meetings. The FOMC meeting on July 28 will be a critical event for monetary policy direction.
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