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The Weekly Fix: Rate-Hike Frenzy, Bonds Scent Inflation Peak

Jerome Powell, chairman of the U.S. Federal Reserve, leaves after testifying before a Senate Banking, Housing, and Urban Affairs Committee confirmation hearing in Washington, D.C., U.S., on Tuesday, Jan. 11, 2022. Powell said in prepared remarks the central bank will prevent higher inflation from becoming entrenched while cautioning that the post-pandemic economy might look different than the previous expansion.
Jerome Powell, chairman of the U.S. Federal Reserve, leaves after testifying before a Senate Banking, Housing, and Urban Affairs Committee confirmation hearing in Washington, D.C., U.S., on Tuesday, Jan. 11, 2022. Powell said in prepared remarks the central bank will prevent higher inflation from becoming entrenched while cautioning that the post-pandemic economy might look different than the previous expansion.Photographer: Samuel Corum/Bloomberg

Welcome to the Weekly Fix, the newsletter where hiking is about central banks, not long walks in the countryside. I’m Bloomberg’s chief rates correspondent for Asia, Garfield Reynolds.

The December CPI report duly delivered the 7% annual inflation expected, the strongest reading in 39 years. While bonds met the release with calm (more on that later), rates traders marched triumphantly on with ever-more-aggressive wagers that the Federal Reserve will lead a round of rapid tightening moves worldwide. Even as Fed Chairman Jerome Powell channeled Hippocrates -- pledging to do no harm as he stamps out inflation -- his colleagues were busy racing to up the ante and persuade markets they are ready to jump ahead of the curve after being perceived as way behind it.