Traders now see the probability of a US policy rate increase in July as roughly a coin toss. Against a backdrop of resurgent oil prices and a series of hawkish comments from Federal Reserve officials, trading in short-term interest rate markets has heated up, pricing in a 0.25 percentage point hike in July, with the market-implied probability climbing from below 40 percent to 50 percent. Fed Governor Waller said that if underlying inflation suggests broad-based price pressures, a rate hike may be necessary, and the two-year yield briefly rose about 7 basis points to 4.27 percent, its highest level since February 2025. TD Securities US rates strategist Molly Brooks noted that Governor Waller's remarks have raised expectations for a near-term rate hike, further increasing the importance of the CPI release on the 14th.