Bond Market Prices In Higher Interest Rates Amid Fed Warning

Investors are increasingly betting that the Federal Reserve will raise interest rates soon to combat high inflation, causing yields on short-term Treasuries to jump.

The two-year Treasury yield rose to 4.35% from 4.22%, indicating a nearly 58% probability of a rate hike as early as next month, up from 35% the day before.

This shift in market expectations came after Fed Chairman Kevin Warsh emphasized that short-term interest rates are the primary tool for achieving low inflation and a strong job market.