Fed Hike Bets Mount Ahead of CPI Data, Warsh Hearing

Bond traders increased bets for a July Fed rate hike ahead of upcoming US inflation data and an appearance by the Fed chair that could reinforce the case for action. The shift is primarily driven by expectations of higher inflation persistence and hawkish communication. This is likely to keep downward pressure on rate-sensitive assets while supporting higher front-end yields.

Analysis

Bond traders increased bets for a July Fed rate hike ahead of upcoming US inflation data and an appearance by the Fed chair that could reinforce the case for action. The shift is primarily driven by expectations of higher inflation persistence and hawkish communication. This is likely to keep downward pressure on rate-sensitive assets while supporting higher front-end yields.