Traders price in a Fed hike, not a cut, as inflation data jolts the bond market
After a fresh upside surprise in US inflation data, futures markets shifted to pricing the Federal Reserve's next move as a 25-basis-point hike rather than a cut. The 30-year Treasury yield climbed above 5.1%, its highest in nearly a year. Incoming Fed Chair Kevin Warsh inherits an awkward trade-off between rising prices and an economy that is still expanding.
Following a hotter-than-expected reading on US inflation, futures markets shifted to price in a meaningful chance that the Federal Reserve's next move will be a 25-basis-point rate hike rather than the cut that had appeared all but locked in only a week ago. Investors had treated easier policy as the base case; the new data forced a rapid rethink of how durable the disinflation trend really is.
The bond market response was sharp. The 30-year Treasury yield broke above 5.1%, its highest in nearly a year, while two-year and ten-year yields also climbed. Wall Street closed the week in the red, with the S&P 500 and Nasdaq under particular pressure from rate-sensitive technology names. Flows into money-market funds picked up and credit spreads began widening again.
The shift comes as Kevin Warsh prepares to take over the Federal Reserve as chair, having been confirmed by the narrowest Senate margin. Treasury Secretary Scott Bessent has publicly forecast 'substantial disinflation' ahead, but the futures curve now leans the other way. The next employment and retail-sales releases will decide whether Warsh opens his term on a cautious hold or a hawkish hike.
More from North America
Trump's 2026 first-quarter disclosure shows a heavy tilt toward technology stocks
New filings with the US Office of Government Ethics, reviewed by CNBC, show President Donald Trump significantly increased his exposure to technology stocks during the first quarter of 2026. The disclosures place his portfolio choices alongside his public policy statements during the same period. Congressional Democrats are renewing calls for stricter disclosure rules covering presidential trading.
Bond market hikes rates ahead of Warsh as he takes over the Fed
After Kevin Warsh's narrow Senate confirmation as Fed chair, the bond market is already pushing long-term yields higher without waiting for an official Fed move. The climb in 10- and 30-year yields reflects investor bets that Warsh will adopt a more hawkish stance against inflation. The signal runs counter to the White House's preference for rate cuts.
GameStop makes $55.5bn takeover offer for eBay
GameStop CEO Ryan Cohen announced a $55.5 billion takeover offer for eBay, seeing potential to make it a much bigger rival to Amazon.