Investors on Tuesday raised their expectations for four rate hikes from a consensus of three hikes this year after Federal Reserve Chairman Jerome Powell’s congressional testimony. Traders in the fed fund futures market, where investors can place bets on the course of future interest rates, increased the probability of four rate hikes to 33.9% from 24.4% a day ago, according to data from CME Group. Specifically, investors appeared to focus on Powell’s comments that he personally felt the economic outlook had strengthened since December. Government bond investors also reacted to the prospect of a more aggressive central bank as Treasury yields rose and bond prices fell.
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