US Yields Extend Gains as August CPI Boosts Fed Rate Hike Odds to 90%

Key Facts

Amid escalating concerns over resurgent inflationary pressures, recent economic data has triggered a sharp shift in US monetary policy expectations. According to analyst reports, the Consumer Price Index (CPI) for August rose 0.4% month-on-month, leading markets to price in a more than 90% probability that the Federal Reserve will hike interest rates at its meeting next week.

This acceleration in inflation reinforces the upward pressure on Treasury yields, which have already breached the 4.8% threshold for the 10-year note. Simultaneously, Treasury Secretary Scott Bessent conducted the first $6 billion bond buyback auction, but market focus has shifted entirely toward Fed Chair Kevin Warsh's upcoming moves to combat persistent price growth.

Investors should monitor whether yields stabilize above current technical levels as the rate decision approaches. According to the economic calendar, the FOMC meeting next week stands as the primary market catalyst, where the outcome will determine the trajectory for Treasury yields and the US Dollar for the remainder of the year.