Wall Street Jitters: Fears the Fed Will Hike Rates Several Times — Bond Yield Hits 5.03%, Record High Since 2007

Wall Street is on high alert Tuesday after the 10-year U.S. Treasury yield climbed to 5.03% — on track for its highest close since July 2007. In just three months, the yield has risen by nearly 60 basis points, a move rattling global markets.

Investors’ big fear is not only the decision expected on Wednesday from the Federal Open Market Committee (FOMC), but the prospect of a full monetary tightening cycle. On Tuesday, traders priced in a 31% probability that the interest rate will rise by 1 percentage point from now until June 2027 — up from just 3% a month earlier, according to CME FedWatch.

At the center of attention is Fed chair Kevin Warsh — President Trump’s own appointee, in office since May — who has remained silent, but may now be forced to tighten monetary policy several times to fight inflation. Trump will “not like this at all,” given that he demands the lowest interest rate in the world.

Stocks are on red alert: S&P 500 futures fell 0.1%, Dow Jones 0.3% and Nasdaq-100 0.1% ahead of Tuesday’s session open. Even safe havens suffered: gold and cryptocurrencies fell, while the U.S. dollar strengthened. If Wednesday marks the start of a rate-hike cycle, the recent swings in chip stocks will be the market’s least concern.

Source: Barron’s