Markets Weren't Sure When The Fed Would Raise Rates Again. Now October Is The Leading Bet.

Traders were pricing in about a 73% probability that the Fed would raise rates at its Oct. 27-28 meeting, up from roughly 53% earlier. (Credit: Getty Images)

Markets sharply increased their bets on an October Federal Reserve rate hike Wednesday after fresh data showed U.S. business activity accelerating while companies faced their strongest increase in input costs in nearly four years.

Traders were pricing in about a two-thirds probability that the Fed will raise rates at its Oct. 27-28 meeting, up from roughly 53% earlier, according to the CME Group's FedWatch tool. The shift followed stronger readings from the manufacturing and services sectors as well as comments from Federal Reserve Governor Michael Barr, who said further policy adjustments were likely to be needed.