Fed Hike on October 28? What 25 Basis Points Does to $10,000 in T-Bills, 2-Year and 10-Year Treasuries, and a Money Market Fund (October 2026 Math)
Short answer: September inflation came in at 3.7%, and the odds of a Fed hike on October 28 jumped to about 50% before settling near a third. If the Fed does add 25 basis points, $10,000 in a 3-month T-bill loses nothing and simply rolls into a higher rate. The same $10,000 in a 2-year Treasury drops about $45 in price. In a 10-year Treasury it drops roughly $190. A money market fund’s yield just drifts up. None of that is a reason to sell anything; it is the reason to know which of these you actually own.
The number everyone quoted on Wednesday was 3.7%. The number that matters for a bond holder is 25, as in basis points, because that is the size of the move the market is now arguing about for the Federal Reserve’s October 27–28 meeting.
This is a comparison of what that one move does to four places people park cash, using the Treasury’s own yield curve from October 15 and nothing more exotic than duration arithmetic.
Not investment advice. Yields are the US Treasury’s daily par yield curve for October 15, 2026. Price-change estimates are our own duration-based approximations and will differ from actual market moves. Fed probabilities are third-party readings of CME FedWatch and change by the hour.
Jump to a Section
- What did the September CPI report actually say?
- How likely is an October 28 hike now?
- Where did Treasury yields close on October 15?
- The 25-Basis-Point Table: Four Holdings, One Hike
- Why does a 10-year lose four times more than a 2-year?
- What if the Fed holds instead?
- Tips
- Warnings
- FAQ
- Sources
What did the September CPI report actually say?
The US Consumer Price Index rose 0.6% in September 2026 and 3.7% over the 12 months ending September, up from 3.4% in August, while core CPI excluding food and energy rose 0.3% on the month and 2.6% on the year, according to the Bureau of Labor Statistics release of October 14, 2026 (BLS, Consumer Price Index Summary).
Both core readings beat the consensus of 0.2% and 2.5%. Gasoline, up 9.1% on the month, did most of the headline damage.
When I compared the headline and core numbers, I noticed that the gap between them is the whole policy argument. Headline at 3.7% says hike. Core at 2.6% says the energy spike may pass. The Fed’s own members are split along exactly that line.
How likely is an October 28 hike now?
CME FedWatch pricing for a 25-basis-point hike at the October 27–28, 2026 FOMC meeting moved from about 22% before the CPI release to roughly 50% on the morning of October 14, then back to 31.6% by that evening, with a December hike priced at 89.7% (FinanceFeeds, October 15, 2026).
So the market’s honest answer is “probably not in October, very probably by December.” The fed funds target range stands at 3.75% to 4.00% after September’s hike, the first since 2023.
The meeting date itself is fixed: the Federal Reserve’s published calendar lists October 27–28 as the next FOMC meeting (Federal Reserve, FOMC meeting calendars).
New York Fed President John Williams said in late September that there was “no need for urgency” and that “one further upward adjustment” might be appropriate “late this year.” Read literally, that is December, not October. Markets read it the same way once the CPI shock faded.
Where did Treasury yields close on October 15?
The US Treasury’s daily par yield curve for October 15, 2026 showed the 1-month bill at 4.17%, the 3-month at 4.28%, the 2-year at 4.77%, the 10-year at 5.10% and the 30-year at 5.43%, with the 10-year down from 5.21% on October 13 (US Treasury, daily par yield curve).
| Maturity | Oct 13 | Oct 14 (CPI day) | Oct 15 |
|---|---|---|---|
| 1-month | 4.10% | 4.11% | 4.17% |
| 3-month | 4.26% | 4.28% | 4.28% |
| 6-month | 4.34% | 4.37% | 4.35% |
| 1-year | 4.48% | 4.53% | 4.49% |
| 2-year | 4.79% | 4.82% | 4.77% |
| 5-year | 5.00% | 5.00% | 4.91% |
| 10-year | 5.21% | 5.19% | 5.10% |
| 30-year | 5.56% | 5.52% | 5.43% |
US Treasury daily par yield curve rates, October 13–15, 2026.
Notice what the curve did after the hot print. Short bills ticked up, as you would expect if a hike is coming. The 10-year fell 11 basis points. The long end is pricing slower growth, not more inflation. That split is unusual and it is the reason the table below is not symmetrical.
The 25-Basis-Point Table: Four Holdings, One Hike
If the Fed raises its target range by 25 basis points on October 28, 2026 and Treasury yields rise by the same amount across the curve, a $10,000 position loses roughly $45 in a 2-year note and roughly $190 in a 10-year note, while a 3-month bill and a money market fund see no capital loss and start earning more.
The table uses modified duration, the standard measure of how much a bond’s price moves for a 1-percentage-point change in yield. For a 2-year note near 4.8% that is about 1.9; for a 10-year near 5.1% it is about 7.7.
| $10,000 in… | Yield Oct 15 | Approx. duration | Price change on +25 bp | Extra income per year after | Net effect |
|---|---|---|---|---|---|
| Money market fund | tracks fed funds, ~3.75–4.00% | ~0 | $0 | up to +$25 | Only upside, with a lag of days to weeks |
| 3-month T-bill | 4.28% | 0.25 | about −$6 if sold early, $0 if held | +$25 on the next roll | Nothing to feel; the next bill pays more |
| 2-year Treasury note | 4.77% | 1.9 | about −$48 | $0 (coupon fixed) | Recovered by maturity; about 4 months of coupon |
| 10-year Treasury note | 5.10% | 7.7 | about −$193 | $0 (coupon fixed) | About 4.5 months of coupon; only matters if you sell |
Our estimates. Price change ≈ −duration × 0.25%. Duration figures are approximations for par notes at the October 15, 2026 yields. Assumes the whole curve moves with the Fed, which it rarely does exactly. Money market yield is the fed funds target range of 3.75–4.00% as a proxy; actual fund yields differ.
Two things to take from the net-effect column. First, the only holdings with a dollar loss are the ones with a fixed coupon and years to run. Second, even the 10-year’s loss is less than half a year of its own interest. Painful on a statement, not a disaster.
Why does a 10-year lose four times more than a 2-year?
A 10-year Treasury loses about four times as much as a 2-year on the same 25-basis-point move because its duration is roughly four times longer, and the ratio stretches toward eight at the 30-year end, since a longer bond locks in a now-below-market coupon for more years and the price has to fall further to compensate a new buyer.
Most people skip this and regret it. They buy the 10-year because 5.10% beats 4.28%, then discover the first hike wiped out most of a year’s extra yield on paper.
The flip side is just as real. If the Fed does not hike, or cuts next year, the 10-year is the one that gains. Duration is not a bug. It is the amount of bet you are making on the direction of rates.
We covered the reverse of this trade, holding through an earnings-driven move rather than a rate move, in our look at how Apple and Amazon reacted to the same earnings season.
What if the Fed holds instead?
If the Fed holds on October 28, 2026, which FedWatch priced at roughly two-in-three odds on the evening of October 14, the table flips sign only for the bonds, and bills and money market funds simply keep paying what they pay today.
With a December hike priced near 90%, a hold in October does not remove the move. It delays it. For the 2-year and 10-year that means the price pressure arrives in December instead. For bills it means one more roll at roughly today’s rate.
Honestly, that is why the bill-versus-bond choice is less about guessing the date and more about whether you need the money before the bond matures. If you do not, the price swings are noise. If you do, they are the whole story.
Tips
- Check the Treasury’s daily par curve, not a news headline, when you compare maturities. It is free and updated each afternoon.
- Work out your own duration number: the price loss per $10,000 on a 25-basis-point move is roughly duration × $25.
- If you hold a bond fund rather than individual bonds, the fund’s reported duration is the figure to use. There is no maturity to wait for.
- Mark October 28 and November 10 on the calendar: the FOMC decision and the next CPI report.
Warnings
- Duration estimates are linear approximations. Real price moves differ, and more so for the 30-year.
- Yields across the curve do not move in lockstep with the Fed. On October 15 the 10-year fell while bills rose.
- FedWatch probabilities are market prices, not forecasts. They moved from 22% to 50% to 32% within one day.
- Treasury interest is taxable at the federal level. Compare after-tax yields for your bracket before switching holdings.
FAQ
Does a Fed hike raise the yield on a T-bill I already own?
No. A bill you already hold pays the discount you bought it at. The higher rate applies to the next bill you buy when the current one matures, which for a 3-month bill is never more than 13 weeks away.
Will a money market fund’s yield rise the day the Fed hikes?
Not the same day. Government money market funds hold short paper that rolls over continuously, so the fund’s seven-day yield drifts up over a few weeks as older holdings mature into higher-rate ones.
Is a 10-year Treasury at 5.10% a bad buy if a hike is coming?
It depends on whether you will hold it to maturity. Held for ten years, a 25-basis-point hike changes nothing about the coupons you receive. Sold within the first year, the price drop can exceed the extra yield the note offered over bills.
Sources
- US Department of the Treasury — Daily Treasury Par Yield Curve Rates, October 2026
- Bureau of Labor Statistics — Consumer Price Index Summary, September 2026 (released October 14, 2026)
- Federal Reserve Board — FOMC Meeting calendars and information
- FinanceFeeds — Will the Fed hike on 28 October? What the odds did after a 3.7% CPI (October 15, 2026)
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Fact-checked against the US Treasury yield curve, the BLS September 2026 CPI release and the Federal Reserve’s FOMC calendar as of October 16, 2026. Price estimates are our own approximations; this is not investment advice.
