U.S. bond traders scale back Fed tightening bets, now see first 25 bps hike in 2027

Data tracked by Trader T show interest-rate swaps pricing in a single 25-basis-point Federal Reserve rate increase by January 2027, implying a 100% probability. The repricing comes as U.S. core inflation picked up slightly last month, crude oil slipped below $85 a barrel, and President Donald Trump said progress had been made toward a peace agreement with Iran. HSBC Securities rate strategist Dhiraj Narula said signs the Strait of Hormuz could reopen, combined with softer oil prices, have pushed out expectations for when rate hikes may resume.