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Bond Traders Give Fed Green Light to Lift Rates as Soon as June

  • Futures market lifts odds of an increase by mid-year to 50%
  • Benchmark 10-year Treasury yield climbs to six-week high
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Has the Fed Reached a Tipping Point?

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The bond market is boosting its bets on a Federal Reserve interest-rate increase in June as stocks and oil rally.

After Treasury 10-year notes recorded a third straight weekly decline, traders now see the odds of a June rate hike at about a coin flip, according to futures data compiled by Bloomberg. That’s up from a 45 percent chance assigned March 10 and odds below 10 percent seen a month ago. Since 1994, the Fed hasn’t raised rates unless the futures market had priced in at least 60 percent of the move the day before, Bank of America interest-rate strategist Mark Cabana wrote in a March 11 note.