Warsh Hike Expectations Rise Amid Labor Market Data Fears

Bond investors are on high alert ahead of Friday's labor market data release, which could temper growing expectations for a Federal Reserve interest rate hike in September.

The swaps market has been pricing in a more than 50% chance of a quarter-point increase on Sept. 16, with odds edging higher after reports suggested that Fed Chairman Kevin Warsh is prepared to raise rates if inflation readings remain hot in the coming weeks.

The Financial Times reported on Thursday that Warsh would be willing to take action if inflation numbers show no signs of cooling down.