Until Friday, no one would have expected US inflation to burst again, putting a lot of pressure on the Fed, and speculation of a more aggressive rate hike in the coming months is rife.

The market for short-term Treasuries, which is more sensitive to changes in interest rates, has reacted particularly strongly. Even as investors got used to volatility of 10 points a day, Friday's market reaction was shocking, as if it were going back to the global financial crisis.

The yield on two-year Treasuries surged 26 basis points to 3.07 per cent, the biggest increase since 2009. The yield on the five-year Treasury note rose 19 basis points to 3.25%, setting a new high for 2008.The yield on the 30-year note rose 3 basis points to 3.19 per cent.

Us stocks also sold off sharply, with the S & P 500 down 2.9 per cent.

The sharp rise in short-term interest rates has caused the Treasury yield curve to hang upside down again.This means that the market believes that the Fed's tightening policy will lead to a rapid economic slowdown or even a recession.

"there is no doubt that the economy is slowing," Jim Paulsen, chief investment strategist at Leuthold Weeden Capital Management, was quoted as saying.

Before that,Investors are already looking forThere are signs of "inflation peaking", but US CPI rose 8.6% in May from a year earlier, a 40-year high, and the month-on-month target also reached 1%.This surprised investors.Core inflation figures, excluding volatile food and energy prices, were also higher than expected.

The worse signal implied by the May CPI data is thatInflation is so high that it has been fully immersed in the economy.Brean Economics noted that inflation showed no sign of decelerating, with 61 per cent of CPI components recording year-on-year growth of at least 6 per cent in May.

Therefore, critics believe that the May CPI report is in line with a view that is becoming more and more popular.That is: inflation is no longer just the product of disruption in the commodity supply chain, it is also driven by strong consumer demand and strong wage inflation.

Traders have begun to anticipateFederal ReserveInterest rates will be raised by 50 basis points in June, July and September respectively.

Barclays became the first Wall Street bank to forecast the Fed to raise interest rates by 75 basis points at next week's meeting, with swap market pricing showing a 50 per cent chance of a 50 basis point rate hike in July.

Gregory Faranello, head of US interest rate trading and strategy at AmeriVet Securities, told the media.

The Fed wants to try its best to avoid an economic downturn while controlling inflation, but that goal now seems increasingly difficult to achieve.

After the start of the tightening process, inflation is still steadily rising, consumer confidence has been eroded, and the bigger concern is that even if the economy slows or there is a recession, inflation will remain high. this is reminiscent of the stagflation of the late 1970s.

Michael Darda, chief economist of MKM Partners, was quoted as saying by the media.

Next, all eyes will be on the Fed's FOMC meeting next week and the subsequent Powell press conference. At that time, the Fed's inflation forecast and bitmap will be crucial to the market.

In March, the Fed forecast a median interest rate of 1.9% for the end of the year, which will rise to 2.6%, according to a media survey.And the implied expectation of the market is as high as3.2%。

As prices rise, retailers are in trouble and inventories are piling up. Target, the second-largest retail giant in the United States, cut its profit forecast twice in three weeks. At the same time, the U.S. real estate market also continued to cool signs, large technology companies began to freeze hiring.

More speculation poured in.Whether this round of Fed rate hikes is also a "short-lived cycle", likeCome to an abrupt end like 2018?