# CME FedWatch Interest Rate Hike Odds and Treasury Yields

**Published:** 2026-08-18T18:06:02.821Z  
**Topic:** Fed Rates  
**Sentiment:** neutral  
**Publisher:** TrendWatcher — https://www.trendwatcher.in/article/3cd78336-095f-4d3e-8923-95682efe16f3

Markets price a 36.6% chance of a September Fed rate hike as 30-year Treasury yields hit 5.31%, the highest level since 2007. See the latest data here.

Investors are currently pricing a 36.6% probability that the Federal Reserve will raise interest rates at its September meeting, a shift in sentiment occurring as long-term borrowing costs reach levels not seen in nearly two decades [1]. This repricing of monetary policy expectations coincides with a broader sell-off in long-duration debt, signaling that bondholders are demanding higher premiums to hold government paper amid concerns over fiscal deficits [3].

| At a glance | |
|---|---|
| 30-Year Treasury Yield | 5.31% |
| September Rate Hike Probability | 36.6% |
| July Housing Starts | 1,239,000 |
| 10-Year Treasury Yield | 4.74% |

## Yields and the Fed outlook
The 30-year Treasury yield climbed to 5.31% on Monday, marking its highest point since June 2007 [3]. This surge in long-term rates has pressured the iShares 20+ Year Treasury Bond ETF (TLT), which fell to $81.38, its lowest level since June 2004 [3]. The move in the long end of the curve persists even as the market’s near-term hawkishness fluctuates; while the current probability of a September hike stands at 36.6%, other data points show that expectations for a 25-basis-point increase have cooled from 53% just one week ago [1, 3].

The macroeconomic backdrop remains mixed, complicating the Fed's path forward. U.S. housing starts dropped 12.4% month-over-month in July to a seasonally adjusted annual rate of 1,239,000, a figure that represents a 13.5% decline compared to the same period last year [1]. While import prices held steady in July, offering some relief from previous inflationary trends, the geopolitical environment has added volatility to energy markets [1]. Brent Crude futures are trading above $91 per barrel following the rejection of a ceasefire extension with Iran, renewing concerns over potential supply disruptions in the Strait of Hormuz [1].

## Market reaction and sector performance
Equity markets have struggled under the weight of these rising yields and geopolitical tensions. On Monday, the Dow Jones, Nasdaq 100, and S&P 500 indices all closed lower, with communication services, consumer staples, and financial sectors leading the decline [1]. Despite the broader market weakness, some individual equities outperformed following earnings reports. Home Depot shares gained 1.99% after reporting adjusted earnings of $4.92 per share, which exceeded the analyst consensus of $4.73 [1]. Conversely, Super League Enterprise shares fell 12.25% after reporting revenue of $3.01 million, missing the consensus estimate of $3.40 million [1].

## What to watch
*   **Industrial Data:** Investors are monitoring July’s industrial production and capacity utilization figures, scheduled for release at 9:15 a.m. ET [1].
*   **Housing Market:** The pending home sales index, due at 10:00 a.m. ET, will provide further clarity on the health of the housing sector following the sharp drop in July starts [1].
*   **Energy Volatility:** Watch for further developments in the Middle East, as crude oil prices remain sensitive to the ongoing standoff in the Strait of Hormuz [1].

The divergence between rising long-term yields and fluctuating expectations for near-term Fed action suggests that the market is still recalibrating its view of the "neutral" rate. Whether this trend reflects a fundamental shift in inflation expectations or a structural response to government borrowing remains the central question for fixed-income participants.

## Sources
1. Benzinga — [Stock market today: Dow Jones, S&P 500, Nasdaq 100 futures fall as Trump rejects...](https://www.benzinga.com/markets/equities/26/08/61266417/stock-market-today-dow-jones-sp-500-futures-fall-as-trump-rejects-extending-ceasefire-with-iran-home-depot-super-league-flexsteel-in-focus)
2. CNBC — [FedWatch's Ben Emons forecasts gradual Fed rate cuts in 2026](https://www.cnbc.com/video/2025/12/26/fedwatchs-ben-emons-forecasts-gradual-fed-rate-cuts-in-2026.html)
3. Benzinga — [30-Year Treasury Yields Jump to 5.31%, Highest Since June 2007 - iShares 20+...](https://www.benzinga.com/markets/bonds/26/08/61257711/30-year-treasury-yield-5-31-highest-since-2007)

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