How Wide Is the Inflation Chasm Between Fed, Investors?
Betting on inflation? Better mind the gap.</br></br>Tuesday's release of minutes from the Federal Reserve's March meeting may give some hints if policy makers are getting on board with the idea of a sustainable U.S. recovery and the threat of inflation.</br></br>Investors already are there. On Monday, the yield on 10-year Treasury notes punched through 4% for the first time since June, while oil and copper traded at their highest levels in more than 18 months.</br></br>This followed strengthening economic data. Friday's Labor Department report showed private-sector hiring rose in March for the fourth time in five months, while a gauge of March service-sector activity released Monday hit a four-year high.</br></br>Traders are betting the Fed will have to soon fend off that pressure. Futures markets expect the central bank to raise its target federal-funds lending rate to 0.5% by its November meeting, if not sooner, from current near-zero levels.