bond yields rose on wednesday as traders increased bets that central banks will continue to hike borrowing costs to battle inflation sovereign bond yields continued to move higher as traders priced in aggressive tightening of monetary policy by central banks following federal reserve chair jay powell’s hawkish comments at the end of last week the policysensitive 2year treasury yield hit a 15year high of 35 at one point on wednesday morning jan nevrusi us rates strategist at natwest markets noted that a number of fed officials who have spoken since powell’s speech have not deviated from the chairman’s line “the message remains consistent the fed has a lot more work to do rates have to go into restrictive territory and the urgency to bring inflation down to target keeps increasing particularly richmond fed president barkin’s remark saying the fed will do what it takes to bring down inflation resembled mario draghi’s famous ‘whatever it takes’ comment in 2012” said nevrusi in a note to clients markets are pricing in a 705 probability that the fed will raise interest rates by another 75 basis points to a range of 300 to 325 after its meeting on september 21st the central bank is expected to take its borrowing costs to 39 by april 2023 according to fed funds futures the move index a measure of expected treasury market volatility was trading at 1277 up 52 for the year the elevated level comes as investors also nervously try to forecast the impact of an imminent acceleration in the fed’s quantitative tightening the central bank in september will raise the amount of treasuries and mortgagebacked securities it allows to mature to a total of 95 billion per month this will accelerate the process of shrinking the central bank’s 9 trillion balance sheet meanwhile investor attention will turn to a busy few days of data that may provide additional downward momentum for bond prices particularly if friday’s nonfarm payrolls report signals the economy is sufficiently robust to absorb more rate hikes us data set for release on wednesday include the adp employment report for august due at 815 am eastern and the chicago manufacturing pmi survey for august due 945 am eastern also contributing to upward pressure on us borrowing costs are higher yields on european benchmark bonds as surging energy prices add to inflation concerns across the continent the 10year german bund yield tmbmkde10y rose 7 basis points to 1582 after data showed eurozone inflation hits a fresh record high of 91 on august the news was seen increasing the chances that the european central bank will hike interest rates by 75 basis points from the current zero at its next policy meeting on september 8 similarly with uk inflation forecast by the bank of england to hit 13 in coming months the 10year gilt yield tmbmkgb10y was up 14 basis points to an eightyear high of 2851