Rising 30-year Treasury yields and persistent core inflation pressure Fed rate hike expectations for 2026.
The 30-year Treasury yield climbed to a 19-year high last month, signaling potential stock market volatility. The move reflects growing investor bets on Federal Reserve rate hikes in 2026, reversing earlier expectations of cuts.
Core PCE inflation, the Fed’s preferred gauge, reached 3.3% in April, its highest since late 2023. Rising oil prices and supply disruptions from the Iran conflict have pushed transportation and manufacturing costs higher, fueling inflation concerns.
Markets had anticipated a 50-basis-point rate cut in 2026, but those odds have now collapsed. The Fed may prioritize combating inflation over economic growth, increasing pressure on equities.