I know that there is usually no rate increases in an election year but there is always an exception?
http://www.bloomberg.com/news/artic...on-outlook-jumps-as-goldman-says-more-to-come
Bond Market Inflation Outlook Jumps as Goldman Says More to Come
Goldman Sachs Group Inc. says inflation pressures are starting to build -- and bonds are signaling traders agree.
Investors anticipate consumer prices worldwide will rise 1.3 percent annually, the highest level in 14 months, based on Bank of America Corp. data. The figure, derived by comparing yields on nominal government bonds to those on inflation-linked debt, is still less than the Federal Reserve’s 2 percent target.
“All of the signals are suggesting that we are now pretty close to full employment, and we’re starting to exert some upward pressure on inflation,” Jan Hatzius, chief economist at Goldman Sachs in New York, said in a Bloomberg Television interview Tuesday. “I do think the Fed is going to respond to that. Gradually, but I think they will respond.”
There’s a 65 percent chance the Fed will raise interest rates in December, said Hatzius, whose firm is one of the 23 primary dealers that trade directly with the U.S. central bank. The probability is 50 percent, fed fund futures show.
The bond market shows the world probably isn’t entering an inflationary period, said Roger Bridges, the chief global strategist for interest rates and currencies in Sydney at Nikko Asset Management Co.’s Australian unit, which oversees $14.6 billion.
“I don’t think it’s suggesting that we’re going to see inflation,” he said. “It just means that the fear of deflation is lessening.”
U.S. 10-year note yields were little changed at 1.56 percent as of 12:49 p.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 1.5 percent security due in August 2026 was 99 14/32.
Japan’s 10-year bond yields declined one basis point to a five-week low of minus 0.09 percent, and Australia’s dropped three basis points to 1.95 percent.