Investors bet Federal Reserve will sharply boost rates to battle inflation
email rounding up the latestShorter-dated US government bonds dropped in price on Monday in the latest sign of how investors are expecting the Federal Reserve to aggressively tighten monetary policy in an attempt to rein in inflation.
Short-term bonds have sold off more vigorously this year than ones at the longer end of the spectrum as expectations for a series of Fed rate rises in the coming months weigh on the longer-term economic growth forecast. In a sign of those concerns, the five-year Treasury yield on Monday rose above the 30-year yield for the first time since 2006. A so-called yield-curve inversion of this nature reflects concerns that the Fed’s attempt to battle inflation could over time depress growth or even cause a recession.in February, with analysts expecting the surge to continue as price disruptions caused by industries reopening from coronavirus lockdowns are exacerbated by the Ukraine war causing soaring commodity costs.