Inflation Accelerates, Traders Boost Rate Hike Odds to 85%

The U.S. Consumer Price Index increased by 0.4% in August after rising 0.1% in July, according to data from the Labor Department's Bureau of Labor Statistics.

This acceleration in inflation has prompted traders to increase their expectations for a rate hike from the Federal Reserve next week, with markets now seeing an approximately 85% chance of a quarter-point hike compared to around 67% prior to the data.

The benchmark 10-year Treasury yield was little changed on Friday at 4.95%, helped by retreating oil prices, while the 30-year yield scaled another 19-year top before falling back.

Analysts at JPMorgan now expect eight of the nine developed-market central banks to hike interest rates by the year end, including the Fed and all four central banks in Europe.