Bond traders are piling into bets that the Federal Reserve will raise interest rates at its July meeting, pushing futures volume to record levels.
CME Fed funds futures show the odds of a July rate hike peaked at roughly 40% before settling to around 30% following fresh economic data. Bond futures contracts surpassed 500,000 in mid-June, a record. Even if July doesn’t deliver a hike, the market is pricing September odds at nearly 80%.
Warsh wastes no time setting the tone
New Fed Chair Kevin Warsh, who took office in May 2026, made his hawkish intentions clear at his debut FOMC meeting on June 17. The dot plot from that meeting showed nine out of 18 policymakers anticipating at least one 25 basis point hike before year-end.
The current benchmark federal funds target range sits between 3.50% and 3.75%. A 25 basis point hike in July would push that range to 3.75%-4.00%.
