🟦 U.S. Treasury Market Focuses on Fed Meeting and Auctions; Traders Bet on Rate Cuts by Year-End.

As tensions in the Middle East push oil prices higher, U.S. Treasury traders are closely watching this week’s Federal Reserve meeting to gauge officials’ views on the inflation outlook.

The market broadly expects the Fed to keep rates unchanged on Wednesday, but traders are increasingly betting on cuts before year-end. Swap market data from Friday shows the probability of a rate cut by year-end has risen to around 40%.

This trend could pave the way for Kevin Warsh, Trump’s nominee, to take the helm of the Fed and implement more accommodative policies. Investors will listen closely to Chair Jerome Powell’s post-meeting press conference for clues about his plans after his term ends in May 2027.

The week will also feature Treasury auctions, including 2-year and 5-year notes, to test market demand at current yield levels.