Markets Eye Potential of Surprise Rate Hike As Fed Mulls Response to Persistent Inflation
• Traders are considering the possibility of another Fed rate hike to combat stubbornly high inflation.
• Markets are pricing in a small probability of a rate hike in the next 3 months.
• The 10-year Treasury yield isn't pricing in further rate hikes, presenting a risk.
• Investors are looking for signals in the latest Fed meeting minutes on policymakers' reaction to hot inflation data.
• The bar for additional rate hikes is seen as very high, but the Fed may delay rate cuts.