Federal Reserve markets experienced a coordinated selloff as rate cut expectations evaporated across multiple timeframes. October 2027 "Fed maintains rate" bets surged 45 cents from 24¢ to 69¢, while December 2027 saw similar action. The pattern suggests traders are pricing in a higher-for-longer scenario that extends well beyond current Fed guidance.

The shift aligns with recent economic data showing persistent inflation pressures. The median Fed official projects just one rate cut in 2026 despite increasing inflation expectations, while markets have shifted to pricing potential hikes from other central banks. With Jerome Powell's term expiring May 15, 2026, and a new Fed Chair expected to cut rates one or two times to bring rates closer to 3-3.25%, traders are betting the easing cycle faces more obstacles than previously anticipated.