fresh from a threeday holiday break in the us investors returned on tuesday to a bond market that’s bracing for an aggressive start to the federal reserve’s monetarytightening campaign to combat inflation now at an almost 40year high evidence of those more aggressive expectations could be seen in fed funds futures which were pricing in a morethan100 chance of a 25basispoint rate hike in march as of early tuesday strategists said that implies some chance of a greaterthanexpected 50basispoint increase they said a size that the fed last delivered in may 2000   “now that the fed has moved away from the idea of transitory inflation and there are geopolitical risks looming over us with fears of a russian invasion of ukraine which could lead to market stress related to gearing up for war a 50basispoint oneanddone rate hike in march would be seen as a way to acknowledge inflation and see how the market takes it” michael franzese head of fixedincome trading at mcap said via phone  “a lot of people believe the fed is behind the eightball and this is one of the things now being floated out there” he said but it doesn’t end there expectations are also growing in some parts of the market for a faster winddown of qe purchases with widening mortgage spreads and chatter among traders suggesting that fed officials might even accelerate the tapering process to end in february or completely stop in january said scott buchta senior managing director and head of fixed income strategy at brean capital in chicago however fed officials have gone to some length to dash speculation of a sudden end to asset purchases in january and traders like franzese also don’t see an abrupt stop happening the fed’s next meeting is jan 2526 in washington   read fed to use upcoming policy meeting to get ducks in a row for march liftoff  the recalibration of expectations around the fed’s most likely path forward has nonetheless been dramatic taking its greatest hit on bond prices while sending major us stock indexes sharply lower this year the technology sector felt the most pressure with the nasdaq composite index comp falling 18 in tuesday afternoon trading and more than 6 year to date  government bonds are off to their worst start to a new year in decades as investors aggressively sell off treasuries sending yields soaring in the first 11 trading days of 2022 as of early tuesday the 2year treasury yield tmubmusd02y  or rate most closely associated with the path of fed policy was up 30 basis points according to dow jones market data and the 10year yield tmubmusd10y  which influences the longterm cost of borrowing for consumers was up 34 basis points the last time either yield has risen by as much during this same time of the year was in 1982 when the 10year rate hovered above 14  meanwhile the 5year treasury yield tmubmusd05y was up 36 basis points the worst start for the 5year maturity since 1992    “it’s amazing to see how quickly the market has recalibrated its view on the fed since the december fomc meeting” brean capital’s buchta said via phone tuesday he says he sees less likelihood of a 50basispoint initial rate hike than others do since accelerating the pace of tapering and then shrinking the fed’s more than 8 trillion balance sheet could alleviate the need to raise rates more aggressively  futures reflect traders expectations for a fed funds rate target that doesn’t get any higher than 15 out to 2023 from its current level between zero and 025 but kit juckes global macro strategist at société générale gle  says the latest shift higher in yields “reflects a market that may be beginning to think about a higher implied terminal rate rather than just a faster pace of increases initially” which should support the dollar in the first half of the year  sign up for our market watch newsletters here