A hawkish wave swept through Federal Reserve rate markets, with traders dramatically repricing the path of monetary policy through April 2027. The market for rates above 1.25% exploded from 26¢ to 82¢, a massive 56-cent surge that signals expectations for significant tightening ahead.

The pattern repeated across the rate spectrum: above 1.50% jumped 54 cents to 82¢, while above 2.75% climbed 42 cents to 56¢. However, expectations for the highest rates retreated, with above 3.25% falling 33 cents to 49¢, suggesting traders see aggressive but not extreme tightening.

The coordinated movement across multiple rate thresholds indicates a fundamental shift in inflation expectations or economic growth projections. With the Fed currently maintaining accommodative policy, the market is pricing in a sustained campaign of rate increases — a stark reversal from recent dovish sentiment. The highest volume came in the 3.25% threshold at 108 contracts, showing significant conviction behind this hawkish repricing.