Fed's Williams: One More Hike in 2026, None in 2027 — Treasury Yields Fall

What we know

NY Fed President John Williams delivered a key set of remarks flagged across multiple feeds. He sees one more rate hike as appropriate in 2026 and no need for further increases in 2027. He said the economy is not overheating, there is no labor market inflation pressure, and disinflationary forces are still at play. Importantly, he flagged that AI infrastructure demand is pushing up chip prices and construction costs, with supply unlikely to catch up for years. Treasury yields moved lower in response, with the 30-year at 5.565% (-3.42bps). Running in parallel: Harley Bassman's warning of a $110B Treasury selling shock if the 20-year yield breaks above 6% — a scenario where CBOT futures negative convexity forces massive hedging selling — was amplified by both stock trading and stock trading accounts. Tomorrow's CPI print is also on traders' radar per an account on X.