Inflation Data Sparks Investor Optimism and Bond Trader Concerns

Bond traders are increasing their bets that the Federal Reserve will continue with interest-rate hikes, as the monthly consumer-price index report is expected to show a significant jump in inflation. The Treasury market has been volatile as strong economic growth and rising energy prices suggest that monetary policy may remain tight for longer than anticipated. While there is optimism that the Fed may be done with rate hikes, futures traders see a 50% chance of a rate increase in November. The pace of inflation remains above the Fed's target, and the upcoming CPI data will provide insight into the central bank's future actions.