U.S. Treasury yields surge toward new highs—will the Fed hike again in October? My conclusion: No. Although yields across the 2-year to 30-year spectrum are rising rapidly, and markets一度 pushed the probability of an October hike to around 70%, when considering official statements, the structure of inflation, and the recent hike in September, there is currently insufficient justification for consecutive rate increases. The most critical signal comes from John Williams, President of the New York Fed. He recently stated that if the economy develops as expected, one more hike this year would be appropriate—but the September increase has already given the Fed time to observe, and there is no urgent need to act further at this stage. Following his remarks, FedWatch data shows the probability of an October hike has dropped from around 70% to roughly 50%. Why can the Fed afford to wait? Because today’s inflation is not identical to the surge seen in 2022. Back then, demand, employment, and prices for goods and services were all overheating simultaneously. Now, core PCE has begun to peak and decline; new inflationary pressures stem largely from Middle East tensions pushing up diesel and energy prices. The problem with supply-side shocks like these: Higher rates can dampen demand—but they cannot directly lower oil prices. Therefore, unless energy prices spiral further out of control or clearly spill over into core inflation, aggressively hiking rates to counter short-term oil spikes may impose greater costs than benefits. Moreover, since the Fed already hiked in September, it has ample reason to pause and assess data before deciding whether to act again in December. So my current view is: Pause in October, while preserving the possibility of one more hike in December. What truly matters going forward isn’t how high Treasury yields can rise—but whether the energy shock begins to spread into core inflation. If it doesn’t, no matter how hawkish bond markets become, the Fed may not feel compelled to follow.