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Traders Brace for 4% Peak in Fed Rate as Bond Rout Intensifies

  • 50% odds of a 75-basis-point hike seen at this week’s Fed meet
  • Front-end Treasury yields surge as much as 30 basis points
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Fed Should Hike 100 Basis Points, Wharton's Siegel Says
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Money markets now see the Federal Reserve’s key overnight rate peaking at 4% by the middle of next year, as expectations for policy tightening ramp up. 

Pricing for the US central bank’s so-called terminal rate comes as traders bet on nearly 200 basis points of rate increases at the next three Fed rate decisions, with a 50% chance of a three-quarter point hike coming as soon as this week.