Markets Price Four Fed Hikes Through June 2027 as Bitcoin Extends Losses

Markets are increasingly anticipating four more Federal Reserve rate hikes by June 2027, while higher Treasury yields and a stronger dollar are putting pressure on bitcoin and gold.

U.S. Treasury yields are rising across the curve as traders prepare for an extended period of tighter monetary policy. CME FedWatch data indicates that markets currently see a 4.75% to 5% federal funds target range by June 2027 as the most likely outcome.

Reaching that range would require four quarter-point increases from the current 3.75% to 4% target. The Federal Reserve has already raised its benchmark rate by 25 basis points this month.

The upward move in yields is broad-based. The 20-year Treasury yield is nearing 5.5%, pushing the long-duration TLT ETF to record lows below $80. The 10-year yield has moved above 5.1%, a level last seen in 2007. Government bond yields are also under pressure overseas, including in France, Germany, the U.K. and Japan.

Higher borrowing costs and dollar strength are weighing on risk assets. The dollar index has risen above 101 and is up 3% this year. Bitcoin has slipped below $83,000 from its local peak of $87,500, while gold is trading slightly above $4,200, down 25% from its January all-time high.

A stronger U.S. economy is one factor driving yields higher. The S&P Global composite PMI, which tracks manufacturing and services activity, climbed nearly 4.3% to 58.4 in September, surpassing expectations.

At the same time, renewed tensions in the Middle East have increased uncertainty around inflation and contributed to higher oil and diesel prices.

Heavy borrowing to finance AI infrastructure is adding another source of bond supply, increasing competition for investor capital. Strong economic growth, inflation risks and rising demand for funding are collectively pushing Treasury yields higher.

The Japanese yen has also weakened against the dollar, with the exchange rate returning to around 159 yen. That has erased much of the yen’s recovery toward 153 following reports of U.S. and Japanese intervention last month.

The next key question for markets is whether expectations of additional Fed hikes will continue to drive Treasury yields and the dollar higher.