Meanwhile, money markets are currently pricing in a terminal rate of 5.3% by July. BofA Global Research also expects a 25bps hike in the Fed's June meeting, pushing the terminal rate up to a 5.25%-5.5% range. It had earlier pencilled in two rate hikes of 25 bps each in the March and May meetings. "Resurgent inflation and solid employment gains mean the risks to this (only two interest rate hikes) outlook are too one-sided for our liking," BofA wrote in a client note. Before the recent U.S. data, J.P. Morgan had forecast the terminal rate at 5.1% by the end of June.

---