Bond Traders Expect More Fed Tightening as Inflation Remains Unwieldy

Bond traders and Fed chair Warsh agree the inflation fight isn’t over, with markets pricing in additional rate hikes later this year (likely September or October, possibly December) even after June’s CPI drop sparked relief. Two-year Treasury yields have risen, lifting borrowing costs and reinforcing a hawkish stance as Warsh emphasizes returning inflation to around 2%. Bank of America and other strategists anticipate hikes in the Sept/Oct/Dec meetings, and traders remain cautious ahead of the July blackout period amid data volatility and evolving energy and AI-driven growth dynamics.