Yellen Will Meet 2% Inflation Goal

Inflation expectations for the next decade rose to 1.67 percent this week, the highest level since August. Crude oil has rebounded from a 12-year low, raising speculation the gain will make it easier for the Fed to increase interest rates.

Policy markers held off at their meetings in January and March, citing slow inflation and declines in energy prices among the reasons.

“Over the next three to six months, we’re going to see a much stronger U.S. economy, and I think we’re definitely going to be seeing some hikes coming up,” said John Gorman, the head of U.S. debt trading for Asia and the Pacific in Tokyo at Nomura Holdings Inc. Inflation measures are “definitely trending higher.”

The Fed’s preferred inflation gauge climbed 1.3 percent in January from the year before, based on the most recent data. It has surged from 0.2 percent as recently as October.

Treasuries are unattractive, said Soniya Chen, a government bond analyst at Hontai Life Insurance Co. in Taipei, with $6.2 billion in assets.

“The yield is too low for us,” Chen said. Hontai prefers corporate bonds in the U.S., Asia and Europe, and has taken more risk over the past month, investing in global high-yield debt and emerging-market securities, she said.