Traders keep betting on one more Fed rate rise this year
The bet lines up with the Fed's own median projection of a further quarter point move by 2026, even as one White House adviser calls the idea a mistake.
Published
Traders are still pricing in another Federal Reserve rate increase before the year is out. The positioning has not moved since the central bank's last meeting, when it lifted rates by 25 basis points to a range of 3.75% to 4% on a unanimous 12-0 vote, according to this outlet's earlier reporting.
That reporting also showed where the Fed itself stands. Twelve officials see rates at 4.1% by the end of 2026, four see 4.4%, and two see 3.9%, a split that points to one more increase as the median expectation. The Fed also raised its estimate of the long-run neutral rate to 3.25%, and officials described the economy as expanding at a solid pace even as inflation stays elevated, this outlet reported at the time.
The backdrop has not shifted much either. Ahead of the September meeting, traders had already priced in as much as a 95% chance of a quarter point move, this outlet reported. Since then, a rally in oil prices, with Brent up 0.7% and West Texas Intermediate near $102.12 a barrel, has revived inflation concerns, while the 10-year Treasury yield has stayed near 5%, according to this outlet's reporting.
Not everyone agrees with where the market has settled. Christopher Phelan, chairman of the Council of Economic Advisers, has said a further rate increase would be a mistake, a view that runs against the consensus traders have priced in. That consensus has held steady even as the White House has pushed for lower rates, leaving investors positioned for tightening that the Fed's own projections say is more likely than not to arrive by next year, not for the easing some in Washington are asking for.