Bond traders see over 33% chance of Federal Reserve rate hike this week

For the first time in a while, bond traders aren’t just debating whether the Federal Reserve will cut rates. They’re seriously pricing in the possibility it might raise them. According to the CME FedWatch Tool, there’s roughly a one-in-three chance the Fed hikes its benchmark interest rate at the conclusion of its July 28-29 meeting. The current federal funds rate target sits at 3.5-3.75%, where it’s been parked since January 2026. What the numbers actually say The base case is still no change. The FedWatch data from the last few days of July shows approximately 61-63% probability that the Fed holds rates steady on Wednesday. But 30%-plus odds of a hike represent a meaningful shift in market expectations. Prediction markets are even more hawkish on the broader timeline. Polymarket currently assigns a 64% probability that at least one rate hike will occur somewhere in 2026. The platform puts the odds of a hike happening by September at 49.5%, essentially a coin toss. Rising oil prices appear to be the primary catalyst behind this shift. The Fed’s last meeting in June 2026 resulted in no policy changes. Why crypto should be paying attention When rates go up, liquidity tightens. When ...