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 economist forecasts. The Federal Reserve may now have more breathing room to wait and see before raising rates further, as bond traders maintain expectations for a December hike despite the softer inflation reading. The US dollar slipped while two-year Treasury yields decreased slightly.