Daily discussion thread for September 24, 2026

US Treasury bond yields continue to advance, driving higher expectations of further Federal Reserve interest rate hikes

US Treasury bond yields continue to climb to multi-year highs amid rising expectations that the Federal Reserve will adopt a more restrictive monetary policy stance. Benchmark 10-year government bond yields rose by 9.8 basis points to reach 5.21%—a level not seen since June 2007. Concurrently, 2-year Treasury yields advanced by 3.4 basis points to 4.93%, reaching their highest level since May 2024. Furthermore, the 30-year Treasury benchmark increased by 9.2 basis points to 5.49%, touching its highest mark since May 2004.

Against this backdrop, and alongside elevated energy prices, policymakers are expressing heightened concern over inflationary pressures stemming from substantial capital investments in artificial intelligence projects, as well as ongoing tariffs that continue to elevate costs across the broader business environment.

Consequently, market expectations for further rate increases have escalated. According to the CME FedWatch Tool, the market-implied probability indicates a 67% likelihood that the Federal Reserve will raise its benchmark interest rate by 25 basis points at its October meeting. Furthermore, the indicator signals a 56% probability of a second 25 basis point rate increase at its December meeting. These metrics mark a significant shift from previous weeks, during which market participants anticipated only a more interest rate hike for the end of 2026.

Additionally, Federal Reserve Bank of Cleveland President Beth Hammack stated that inflationary pressures remain elevated, warning that it will prove more difficult to return prices to the central bank's target if underlying pressures persist—as quoted by Reuters. This declaration has reinforced inflation fears, maintaining continuous selling pressure across the US bond market.

The Swiss National Bank decides to hold its benchmark interest rate steady, aligning with market expectations

The Swiss National Bank (SNB) decided to hold its benchmark interest rate steady at 0 %, in line with analysts' expectations. The central bank stated that, despite significant uncertainty arising from the ongoing US–Iran conflict in the Middle East that has exerted upward pressure on prices, it deems it appropriate to maintain interest rates unchanged, as macroeconomic indicators continue to signal price stability and economic resilience.

Switzerland's headline inflation rate has risen to 0.8%, remaining well within the central bank's target range of 0% to 2%. Meanwhile, gross domestic product (GDP) growth reached 1.5% in Q2 2026, marking its highest reading since Q3 2021. This favourable economic background is enabling the SNB to adopt a more neutral policy stance. Additionally, the central bank projects average inflation of 0.7% in 2026 and 0.8% in 2027. In parallel, it estimates Swiss GDP growth in the range of 1.5% to 2% for 2026, and 1.5% for 2027, signalling expectations of sustained economic performance over upcoming quarters.

Following the monetary policy announcement, the Swiss franc depreciated by 0.35% against the US dollar, with the USD/CHF currency pair rising to the 0.8274 zone—a highest level not seen since May 2025.

Figure 1. Switzerland Interest Rate (2021–2026). Source: Data from the Swiss National Bank; chart obtained via Trading Economics.