rising us inflation now at an almost 31year high which now includes price rises for a wider range of goods and services has traders once again anticipating a greater likelihood of earlier interest rate increases from the federal reserve next year and one major investment firm is warning that the central bank is now “in an uncomfortable” place  the odds of one 25 basis point hike in the fed’s benchmark rate by june are now nearly 48 up from roughly 43 on tuesday and the chances of that move taking place in march have more than doubled according to the cme fedwatch tool in addition a 15 likelihood of four hikes by december is also being priced in as of wednesday  wednesday’s consumer price index report which saw the headline yearoveryear inflation rate hit 62 in october reflected increases in the costs of everything from food and rent to vehicles and medical care the breadth of the latest reading is raising concerns that the fed may already be behind the curve with lifting rates and that months of persistently high inflation may start to unravel consumer inflation expectations which have long been held in check  “today’s report reaffirms that the fed is in an uncomfortable place” said tiffany wilding north american economist for pimco the newport beach californiabased asset manager which oversaw 22 trillion in assets as of september “while we expected that the next several months would to be difficult for them the strongerthanexpected price gains in october especially in the stickier shelter categories all but confirms that fed officials will once again revise their inflation and rate path forecasts” in december    pimco now sees a risk that the fed’s median forecast incorporates two rate hikes in 2022 versus just a single hike currently and three to four in 2023 meanwhile “headline cpi is likely to reach 7 over the next several months raising big questions around the fed’s ability to manage inflation expectations” wilding wrote in a note  traders have been caught between two competing narratives one scenario is that higher inflation will likely lead to higher interest rates while the other is that slowing economic growth leaves fed policy makers patient about raising rates leveraged players namely hedge funds have recently been unraveling wrongway bets on the direction of rates and some traders say they have less confidence on the best ways to position themselves   read more pain likely for hedge funds as leveraged investors unwind wrongway bond market bets traders say   treasury yields rose across the curve on wednesday with 2year tmubmusd02y through 10year rates tmubmusd10y each climbing 10 basis point or more despite the substantial rise in yields the spread between 5 tmubmusd05y and 30year rates tmubmusd30y flattened to a level not seen since march 11 2020 according to tradeweb data and which sometimes is a sign of potential economic trouble  meanwhile major us stock indexes which have grown increasingly less sensitive to inflation according to the analytics firm quant insight fell on wednesday the dow industrials djia and the sp 500 index spx were each down 02 in afternoon trading while the nasdaq composite index comp fell 05   wednesday’s inflation report left some investors reevaluating their basecase view that us inflation is in the process of peaking before subsequently heading back down to a level that’s still above the fed’s 2 target   “i’ve been a disinflationist for the last 20 years but i’m open and fully on board with the notion of cyclical inflation” said jack mcintyre who helps oversee more than 66 billion at brandywine global investment management in philadelphia mcintyre says his firm has been underweight treasurys the asset class that gets hit the most by higher inflation