Summary

• The bond market will be the center of attention for investors this week as they assess how much inflation risk is lurking.
• The Treasury market has already decided that tighter monetary policy is necessary. The policy-sensitive 2-year yield soared last week, rising above 4.0% for the first time in nearly a year.
• The tension between the 2-year yield and expectations for Fed funds will be closely monitored in the days and weeks ahead.

The bond market will be the center of attention for investors this week as they assess how much inflation risk is lurking. Official reports already highlight accelerating pricing pressures, driven by Middle East turmoil that has lifted energy costs

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