Economics
Treasuries Dare Fed to Step Up Hikes or Risk Inflation Defeat
- Bond tantrum ensues after consumer-price gains quicken further
- Spike in short-term yields inverts curve before policy meeting
The Marriner S. Eccles Federal Reserve building in Washington, D.C.
Photographer: Joshua Roberts/BloombergThis article is for subscribers only.
Treasury traders are throwing down the gauntlet to a Federal Reserve that’s fallen further behind in its fight to cool the hottest inflation in four decades.
A bruising bond selloff ensued Friday, led by policy-sensitive short-term yields, after May data dashed any idea that inflation has peaked. The rout deepened when traders boosted bets on the likelihood of the Fed raising rates by three-quarters of a percentage point in July, while economists at Barclays Plc and Jefferies LLC say this move could come as early as next week.