The first Fed rate hike is now expected as early as July following the hot CPI data

Traders in the futures markets moved up their expectations for the first Federal Reserve interest rate hike to July from September, following a hotter than expected inflation report. “It’s a very sharp move we’re seeing the back end of 2022,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. October’s consumer price index came in at a scorching 6.2% year-over-year, higher than the 5.9% expected. Traders are now fully pricing in a first rate hike for September, but they are pricing in much higher odds that the Fed starts to raise rates sooner. The Fed has said it would complete tapering its bond buying program by the middle of the year, and then begin raising interest rates. “The effective fed funds rate is currently at 8 basis points and the fed funds July contract is priced at 27 basis points,” said Boockvar. Each rate hike is assumed to be a quarter of a percentage points.
Source: CNBC – Bonds