Fed Hikes Gain Momentum as Inflation Fears Reignite

The Federal Reserve is once again at the center of market conversation, this time considering whether interest rates need to increase. The Fed kept its target range at 3.50% to 3.75% in July, but inflation has remained high and energy prices have risen.

Chair Kevin Warsh's recent speech at Jackson Hole warned that inflation had not slowed enough, making it clear the Fed still has work to do before returning inflation to its 2% target.

Markets reacted by increasing expectations for another rate hike, with traders now assigning around a 68% probability to a September hike. Treasury yields followed suit, with the 10-year yield moving toward 4.8% and the closely watched 5% area coming back into reach.