WatcherGuru
Odds of the Federal Reserve raising interest rates at least once this year have surged to 62% on CME's FedWatch tool, up sharply from the cut consensus that dominated the start of 2026. The shift marks one of the steepest hawkish repricings of the year and has spilled straight into risk assets.
Why it matters
The FedWatch market had spent the prior two months pricing roughly two quarter-point cuts by year-end. A 62% probability on a hike means traders are now treating the next policy move as more likely to be tighter than looser. The repricing was concentrated in the front of the curve, signalling that traders see the bar for a hike as lower than the bar for fresh cuts given sticky core services inflation and the recent string of upside labour-market prints.
Market impact
Crypto led the move lower, with $BTC and $ETH selling off as duration-sensitive assets before steadying near session lows. Rate-sensitive tech and the regional bank complex traded in sympathy. The dollar firmed against majors while the two-year Treasury yield jumped roughly 10 basis points on the session. Watch the next CPI print and Powell remarks: any confirmation of the hawkish lean risks extending the move, while softer data could pull the implied probability back toward the cut path quickly.
Frequently asked questions
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What did the FedWatch tool show about rate-hike odds?
Odds of at least one Fed rate hike this year surged to 62% on CME FedWatch, up sharply from the cut consensus that dominated the start of 2026.
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Why did rate-hike odds jump so quickly?
The repricing was concentrated in the front of the curve and reflected sticky core services inflation plus a recent string of upside labour-market prints that lowered the bar for a hike versus fresh cuts.
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How did risk assets react to the hawkish repricing?
Crypto led the move lower, with $BTC and $ETH selling off as duration-sensitive assets before steadying near session lows, while rate-sensitive tech and regional banks traded in sympathy.
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What happened in rates and FX on the move?
The two-year Treasury yield jumped roughly 10 basis points on the session and the dollar firmed against majors as the front of the curve did most of the repricing.
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What data points could reverse the hawkish lean?
A softer next CPI print or dovish remarks from Chair Powell could pull the implied hike probability back toward the cut path the market had priced earlier in the year.
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