An unexpected ____ in the consumer price index tends to create expectations of ____ interest rates and places ____ pressure on Treasury bond futures prices.

Question

Quizplus · Accepted Answer

An unexpected increase in the consumer price index (CPI) suggests rising inflation, which often leads to expectations of higher interest rates to combat inflation. Higher interest rates, in turn, typically result in lower prices for existing bonds, including Treasury bond futures, hence the downward pressure on their prices.

An Unexpected ____ in the Consumer Price Index Tends to Create