Bond traders keep bets on Fed hike in 2026

Traders are adjusting their expectations for interest rate hikes after the US core consumer price index (CPI) rose 0.2% in May, falling short of economists' predictions. The Federal Reserve may now have more breathing room to wait and see before raising rates further, as the softer inflation reading eases immediate pressure on them. Bond traders had previously priced in multiple rate hikes this year, but the recent CPI data suggests a "wait and see" approach is likely.