US bond market expects rate hikes the Fed may never deliver

Bank of America has revised its forecast to predict **three interest rate hikes in 2026**, a sharp reversal from prior expectations of cuts. Traders are now pricing in tighter monetary policy, though the Fed has not signaled such a pivot—raising questions about whether markets are overreacting or if the central bank is preparing for a harder stance. Coverage emphasizes the **disconnect between bond market pricing and Fed communications**, with Reuters highlighting how traders are betting on hikes the central bank may not deliver.

Yahoo Finance, Fortune, and The Business Journals focus on BofA’s analysis, framing it as a potential market correction ahead of Warsh’s leadership. ABC News frames the implications for borrowers, mortgages, and savings accounts, though specifics remain speculative. Watch for the Fed’s next policy statement, which could clarify whether Warsh’s team intends to tighten policy or if this is a temporary market reaction.

Bond yields and Treasury futures will be key indicators of whether traders sustain their hawkish bets—or if the Fed’s actual stance diverges further from expectations.