Bond yields globally recovered some lost ground after closely watched US inflation figures reinforced bets of a small interest rate increase by the Federal Reserve at its meeting next week.
Fed rate futures imply an 81 per cent chance of a 0.25 percentage point lift this month to a range of 4.75 per cent to 5 per cent, and a 19 per cent probability the policy rate will stay on hold. A week ago, the market was leaning to an increase of 0.5 percentage points.after accelerating 0.5 per cent in January, leaving the annual headline figure only slightly lower at 6 per cent. That is down from 6.4 per cent in the 12 months to the end of January.
Still, he is tipping an increase next week as the Fed aims to get inflation back to its target. “We are probably more skewed towards a 25 basis points hike,” said Mr Mead.
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