Fed Rate-Hike Bets Mount Before Inflation Data, Warsh Tes…

Bond traders have significantly increased their expectations for a Federal Reserve interest rate hike in July, with the likelihood reaching around 50%, up from less than 10%. This shift comes ahead of key US inflation data and Federal Reserve Chair's upcoming testimony. Additionally, yields on shorter-term government bonds, particularly the two-year Treasury note, have remained above 4.25%, indicating a heightened market response to potential rate changes.

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By Michael MacKenzie and Edward Bolingbroke

July 13, 2026 at 8:25 PM EDT

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Bond traders ramped up bets for a July interest-rate hike ahead of US inflation data and an appearance by the head of the Federal Reserve that stand to reinforce the need for action.

Rising rate expectations are evident both in interest-rate options, where the market-implied chance of a quarter-point hike later this month has climbed to about 50% from less than 10%, and in US government bonds. The two-year Treasury note’s yield, more sensitive than longer-maturity debt to changes in the Fed’s rate, stayed above 4.25% Tuesday, exceeding the policy rate by a widening margin.

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Fed Rate-Hike Bets Mount Before Inflation Data, Warsh Testimony