Castle Securities believes that inflation pressure may force the Federal Reserve to raise interest rates soon.

Castle Securities believes that the next major risk facing investors is a tightening financial environment, as the Federal Reserve may need to raise interest rates "soon" to contain the increasingly intensifying inflation pressures. Nohshad Shah, Head of Fixed Income Sales for Europe, Middle East, and Africa at the firm, wrote in a client report that the large-scale artificial intelligence investment cycle, tightening energy markets, and a strong labor market are all contributing to the upward risks of economic growth and inflation. "The next likely move by the Federal Reserve is a rate hike... possibly soon," Shah stated. Last Friday, stronger than expected U.S. employment data sparked a global selloff in stocks and bonds, with investors concerned about the excessive strength of the U.S. economy making it difficult for policymakers to continue keeping rates unchanged. This data has led markets to bet that the Federal Reserve will raise rates by 25 basis points before the end of the year, with a 50% probability of a rate hike as early as September.