Fed minutes signal another rate hike likely; Treasury yields hit 24-year high

The Federal Reserve is not done raising rates. Minutes from the September meeting, released Wednesday, show that most officials judged another rate hike "would likely be appropriate by year end," after the central bank raised its benchmark to a range of 3.75 to 4 percent in September, its first increase since July 2023.

The bond market has already moved ahead of them. The 10-year Treasury yield has pushed into the 5.27 to 5.36 percent range, a 24-year high, and the 30-year yield sits near 5.6 percent. Markets are now pricing in roughly three more hikes by next June. For ordinary Americans, that means borrowing costs keep climbing: mortgages, auto loans, and credit cards stay expensive even as the Fed itself has barely moved.

And yet stocks refuse to flinch. The S and P 500 closed at a record 7,791, the Dow at 51,406, and the Nasdaq at 27,301, even as yields spike. The market's bet is the familiar one of the last two years: that the economy can absorb higher rates without breaking, and that the companies earning the profits can outgrow the cost of money.

The tension is what matters here. Record equities plus surging long-term yields plus an administration openly pressuring the Fed is an unusual combination, and combinations like this have a history of resolving suddenly. The Fed's next meeting will be the first test of whether officials follow through on the hawkish signal they just sent. Nothing in these minutes is advice about what to do with your money; it is a picture of where money itself is headed.