bond yields nudged higher on monday as calmer conditions across markets softened demand for the perceived safety of government bonds expectations that the federal reserve will raise interest rates in a few weeks time have hardened after a report on friday showed consumers see inflation over the coming year at a higher level than previously thought markets are pricing in an 882 probability that the fed will raise interest rates by another 25 basis points to a range of 50 to 525 after its meeting on may 3rd according to the cme fedwatch tool the central bank is expected to take its fed funds rate target back down to 46 by december according to 30day fed funds futures as investors have become less uncertain about the trajectory of fed tightening so traders have become less concerned about the chances of sharp vacillations in bonds the boaml move index which measures expected volatility in treasuries is trading around 120 having plunged from near 200 in mid march us economic updates set for release on monday include the empire state manufacturing index for april due at 830 am eastern and the april homebuilder confidence index at 10 am richmond fed president tom barkin is due to make comments at 1245 pm what are analysts saying “despite the softerthanexpected inflation data released earlier last week us inflation expectations shocked investors at last friday’s release the 1year expectation jumped from 36 to 46 due to the surprise surge in energy prices the expectation was a further easing to 35” said ipek ozkardeskaya senior analyst at swissquote bank “combined to waning bank stress the us 2year yield – which is a good proxy of what investors think the fed will do – rose last week although we are still far below the 5 level before the silicon valley bank collapsed” she added