Expectations for Federal Reserve rate hikes have shifted dramatically, with the probability of a hike at the September meeting moving from about 50% to 100%, according to Fed funds futures cited by Interactive Brokers chief strategist Steve Sosnick. The odds of a hike at the upcoming meeting have also risen to about 35%, up from around 10% earlier this month. This repricing comes as longer-term yields remain elevated, with the 30-year Treasury yield holding above 5% for the longest stretch since 2007 and the 10-year yield above 4.5%. Analysts warn that rising bond market volatility, as measured by the MOVE index, could threaten the earnings certainty that has supported stocks, while higher gasoline prices may also pressure consumer spending.
Piper Sandler CompaniesRate hike expectations reduce earnings certainty and pressure stocks, affecting financial firms like Piper Sandler.