The chances of an interest-rate increase next month reached 52 percent Wednesday, up from just 38 percent just two days earlier. What’s fueled the change of heart? Hawkish comments from Fed Bank of Atlanta President Dennis Lockhart on Tuesday, and a surprisingly strong report on U.S. service-sector growth Wednesday morning.
See our infographic: Would rising interest rates affect investing behavior?
“I’m more convinced that they’re going to raise in September,” said Christopher Sullivan, who oversees $2.4 billion as chief investment officer at United Nations Federal Credit Union in New York. “The market has come around to that view, by a slim majority.”
That’s helped drive bond yields higher before the week’s main event, Fiday’s monthly report on unemployment and wages from the Labor Department. Fed officials have said that they will need signs of some further improvement in the jobs market before they raise rates.