The Fed has hiked once, yet the 10-year Treasury yield is at 5.22% and 30-year mortgage rates are at 7.40%, while Michigan consumer sentiment fell to 46.3. Policymakers signal more tightening, but the long end is already doing most of the work.
Vice Chair Philip Jefferson, part of the FOMC center, has argued there is a high bar for an October move even as September minutes showed most officials still expecting another hike by year-end. Source
The Fed has hiked once and signaled more. Treasury investors aren't waiting. The 2-year yield closed Thursday at 4.75%, about 88 basis points above the 3.875% midpoint of the 3.75% to 4.00% target range. Governor Christopher Waller put the futures-implied odds of at least one more hike by December near 85%. A 2-year that far above the policy rate says markets are pricing a hiking path that runs well into 2027.
