By Carjuan Cruz
Investing.com – As U.S. inflation soars to a 40-year high of 8.6% in May, Barclays (LON:BARC) notes the increasing possibility of the Federal Reserve raising interest rates by 75 basis points at its next monetary policy meeting on the 15th of June. Currently, 50 basis point hikes are anticipated at the Fed’s next two meetings in June and July, but the chances of a more aggressive hike have now increased.
Barclays has becomes the first major investment bank to adjust its forecast to 75 basis points and anticipate a path for increasingly aggressive rate hikes.
Investors had hoped that inflation would at least remain stable at 8.3%, signalling that the ceiling could have been reached, allowing the Fed to ease its pace of policy tightening.
The data also sparked revision in equities, with all three U.S. stock indices - the NASDAQ, the Dow Jones, and the S&P500 in the red at the open, and throughout the day.
Short-term US Treasury yields also soared on Friday, after the release of higher-than-expected inflation data raised concerns about a potential recession, with the 2-year rate soaring more than 21 basis points to 3.03%. This would be the highest level since June 2008. Meanwhile, the 10-year Treasury bond yield rose to 3.17%.