Trader raises expectations of Fed rate hike, with 50% probability of a hike as early as October

Odaily Planet Daily News As signs of a stalemate emerged in peace negotiations between the United States and Iran, U.S. Treasury prices fell amid concerns that high energy costs would fuel inflation and prompt the Federal Reserve to raise interest rates. Monday's sell-off pushed up yields on the $31 trillion U.S. Treasury market, with the 10-year yield rising about 6 basis points to nearly 4.5%, while crude oil prices rose more than 7%.

The two-year Treasury yield, which is most sensitive to expectations of Fed policy, also rose about 6 basis points to 4.07%. This came after Iran suspended talks with the U.S. via intermediaries to protest Israeli actions. Traders have increased expectations that the Fed's next move will be a rate hike. Swap markets show traders have fully priced in a rate hike by March 2027, with a 50% probability of a hike as early as October. (Jin Shi)