Wall Street is backing away from a September Fed hike.
The bond market is going the other way
The implied chance of a hike at the Federal Reserve’s Sept. 16 meeting has fallen from nearly 100% in late July to roughly one-third. Over the same stretch, the 30-year Treasury yield (^TYX) has climbed from about 5.09% to 5.31%, its highest level since 2007. At first glance, those moves look backward.
If investors expect less tightening from the Fed, longer-term borrowing costs might be expected to ease as well. Instead, they are rising. That puts Fed Chairman Kevin Warsh back in an increasingly familiar spot, caught between what the central bank is doing and what financial markets appear to want.