A Fed Rate Hike of 75 Basis Points Is a Done Deal for Traders

© Bloomberg. The Marriner S. Eccles Federal Reserve building in Washington, D.C., U.S., on Friday, Oct. 8, 2021. The Senate approved legislation Thursday that pulls the nation from the brink of a payment default with a short-term debt-ceiling increase, breaking a weeks-long standoff that rattled financial markets. Photographer: Stefani Reynolds/Bloomberg

(Bloomberg) — Traders are betting the Federal Reserve will raise rates by three quarters of a percentage point by September to cool the hottest inflation in four decades.

Money markets upgraded their bets from a half-point hike previously. The shift follows a bruising bond selloff on Friday that sent two— and five-year yields to the highest since 2008 and briefly inverted a key part of the Treasury curve — a signal to some investors that Fed tightening will plunge the economy into a recession. 

Economists at Barclays Plc and Jefferies LLC have upped the ante on Fed rate expectations, saying a 75-basis-point move could come early.

Barclays, Traders Set Sights on Fed Rate Hike of 75 Basis Points

©2022 Bloomberg L.P.


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