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Traders Align With Fed on Inflation as Rate-Hike Bets Intensify

Fed-favored inflation gauge has topped 2% since April

After chiding the Federal Reserve earlier this year for having overly bullish inflation expectations, the Treasury market is starting to concede that consumer prices are set to move higher.

Traders are gravitating toward Fed Chair Janet Yellen's stance that the rout in oil prices will fade, inflation will tick up and the U.S. economy will be able to withstand the first increase in interest rates in almost a decade.