Bond traders expect the effective federal funds rate to rise about 0.7 percentage points in the coming months, which is almost three quarter-point rate cuts. The two-year Treasury yield stands at 4.33%, while the effective federal funds rate is 3.63%, indicating the anticipated increase. Federal funds futures show a 61% probability of two or more quarter-point hikes this year, with only a 7% chance of no change. The outlook is driven by renewed energy price pressures after the U.S.-Iran ceasefire collapse and a strong labor market, with Fed Chair Kevin Warsh emphasizing the need to curb inflation.