Market odds of at least 3 Fed rate rises this year top 50%

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The market odds of at least three Federal Reserve rate increases this year have jumped above the 50 per cent mark after a series of top central bankers offered hawkish remarks.

Federal funds futures pin the odds of the US central bank raising its benchmark rate three or more times this year at 52.6 per cent on Wednesday, from 41.4 per cent a week ago, according to Bloomberg data.

The increase came after William Dudley, the influential New York Fed chief, said that the case for tightening monetary policy had become “a lot more compelling”. Other officials, including the heads of the San Francisco, Dallas and Philadelphia Fed branches also made similar remarks on Tuesday.

Odds of a rate increase next month have also risen markedly, to more than 80 per cent on Wednesday from less than 40 per cent a week ago.

The news has ricocheted into the US sovereign bond market, sparking a sell-off in Treasuries. The yield on the two-year note hit its highest level since 2009, with yields further down the maturity curve also increasing.

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