Bloomberg Surveillance · Thursday, July 30, 2026
A key concern raised is the Federal Reserve's credibility, particularly after the recent FOMC meeting. If energy prices continue to rise and inflation doesn't trend downwards as desired, the market's questioning of the Fed's credibility could increase the probability of future rate hikes. This is because the Fed might need to take action to regain trust and suppress upward bond movements.
“The fact is that because the bond market is really questioning that credibility, it almost to a point, starts to raise the prospect the probability of FED hikes later down the line, because they need to react in order to put that credibility back into the market and then suppress that bond movement higher. So actually, I think the probability of hikes has actually increased over the next twelve months off the back of yesterday.”
“I think the one thing. That's changed now is this FED credibility, and they might end up having to hike in a situation just to kind of regain that credibility. I think that's the one thing that's changed in my mind that didn't exist twenty four hours.”