Fed Chairman Warsh's Hawkish Comments Boost July Rate Hike Odds to 50%, Triggering Record Treasury Futures Trading

Federal Reserve Chairman Kevin Warsh's hawkish remarks on June 17, 2026, sharply increased market expectations for a July interest rate hike, driving U.S. Treasury futures trading to a record high. Traders rapidly priced in a 50% probability of a July rate increase, up from near zero previously. CME data released on June 18, 2026, showed over 500,000 contracts traded in a single day, four times the 20-day average and an all-time record for the contracts. This surge reflects significant bets on the Federal Reserve initiating a rate hike at its next meeting on July 28-29. The 10-year U.S. Treasury yield briefly fell 4 basis points to 4.45% on June 18. BNP Paribas, while maintaining its baseline forecast for a December rate hike, warned of rising risks for earlier action, including at the July meeting. This shift in sentiment is also evident in SOFR futures, where long positions betting on rate cuts are being unwound.