Fed Rate Hike Odds Fall to 42% as U.S. Debt Tops $40 Trillion

The CME Group FedWatch Tool shows a 42% probability of a Federal Reserve rate hike at the September meeting, down substantially from a week ago, reflecting softer economic data and fading expectations for another increase. The U.S. national debt crossed $40 trillion this month, according to Treasury data, up from $39 trillion in March.
Treasury Secretary Scott Bessent has expanded the government's bond-buyback program, at least doubling the size of certain operations involving 10-to-30 year securities and raising the maximum from $2 billion to at least $4 billion per operation to support demand for longer-dated Treasuries. The move initially pushed yields lower, but the relief didn't last: the 30-year Treasury yield recently climbed above 5.3%, its highest since 2007, while the 10-year yield sits around 4.69%.
Former Philadelphia Fed President Patrick Harker said on CNBC on Aug. 24 that the central bank needs to confront the debt burden and inflation directly ahead of this week's Jackson Hole symposium, Kevin Warsh's debut there as Fed Chairman.
Ebury chief economist Enrique Diaz-Alvarez said recent data point toward moderating demand and inflation pressures, reducing the immediate need for a hike at the Sept. 16 FOMC meeting, adding, "we think the hurdle is very high and expect no change." He also warned that political pressure from the Trump administration to cut rates could work against Fed hawks favoring tighter policy.