Fed Chair Warsh Signals Hawkish Stance, U.S. Rates Futures Hit 500K Contracts on Thursday

According to CME data released Thursday (June 18), more than 500,000 federal funds rate futures contracts traded hands in a single session, marking a historic high and roughly four times the 20-day average. The surge reflects bond traders rapidly repricing interest rate expectations following Fed Chair Kevin Warsh's debut policy meeting, during which he signaled a hawkish focus on restoring inflation to the 2% target with limited discussion of employment.

Market pricing has shifted sharply. Open interest in August futures contracts rose by approximately 67,000 positions in a single day, and traders have now raised the probability of a 25-basis-point rate hike in the next six weeks—the July 31 policy meeting—to nearly 50%, compared to near-zero expectations before Warsh's statement. BNP Paribas maintains its December rate-hike forecast but acknowledges July is no longer fully off the table.