Traders for the first time in the current cycle are now pricing in a Federal Reserve rate hike as soon as December, according to the Fed funds futures market.
This follows a series of unexpectedly high inflation readings that have pushed the market toward a higher probability of tightening.
The 2-year Treasury yield has risen in response, signaling a shift in market expectations.
The move reflects a broader repricing of the Fed's policy path, with traders abandoning the assumption of rate cuts in favor of a potential hike.
The latest inflation data has upended earlier assumptions that the Fed would ease policy.
Instead, the market is now factoring in a more hawkish stance, with the December meeting emerging as a key focal point.