Markets assign 64% probability of a year-end rate increase amid elevated inflation and Trump’s renewed Fed criticism.
Markets now price a 64% chance of a Federal Reserve rate hike by year-end, driven by 12-month highs in Core PCE and CPI alongside a 4% unemployment rate. The two-year Treasury yield stands at 4.10%, exceeding the current Fed funds rate of 3.62%.
President Trump reiterated plans to remove Fed Governor Lisa Cook, calling the board under Chair Kevin Warsh “hostile” and signaling a second attempt after a Supreme Court procedural setback. The VIX closed at 15.81, reflecting muted market reaction despite political pressure.
Bond markets continue to price in tightening, with the 30-year yield nearing 4.98%. Analysts suggest a politicized Fed could further elevate long-term rates, though immediate volatility remains subdued.