The Fed's hawkish stance boosts interest rate bets, traders believe the probability of a rate hike in October is 100%.

Short-term US Treasury yields surged as Federal Reserve officials indicated they expect to raise interest rates in the coming months, prompting traders to price in a 100% probability of a rate hike by the end of October. Following the decision announced on Wednesday, the yield on 2-year US Treasury bonds, which is particularly sensitive to short-term policy changes by the central bank, rose 14 basis points to 4.19%. This marked the first decision under Chairman Kevin Wash's leadership. In the money market, traders currently believe that the probability of a rate hike by September is high, while the probability of a rate hike by October is 100%.