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Treasury yields climb after Fed chair Kevin Warsh comments raise inflation doubts
After the Fed held rates flat for a fifth straight meeting, the 10-year Treasury yield rose about 4 basis points during the session and flirted with 4.75% Friday.
Treasury yields moved higher after this week’s Federal Reserve meeting, where the central bank kept interest rates unchanged for a fifth straight meeting. Investors said comments from newly appointed Fed chair Kevin Warsh added to uncertainty about whether the Fed can rein in inflation.
According to Bisnow, the yield on the 10-year Treasury note increased about 4 basis points between the time the Fed released its decision and the market close Wednesday. Markets later flirted with 4.75% on Friday, a level some commercial real estate participants had treated as a potential stress ceiling after the era of ultra-low rates.
Evercore ISI said the bond market reaction was driven less by the July decision and more by questions about the strategy Warsh intends to pursue for price stability. A former St. Louis Fed president also criticized Warsh for focusing on the inflation target without clearly signaling readiness to take action.
Bisnow also cited Warsh’s plans for five task forces to review how the Fed tracks the economy and makes policy decisions, plus discussion of potentially reducing the frequency of FOMC meetings. J.P. Morgan Chief Economist Michael Feroli said the remarks raised concerns about the credibility of delivering lower inflation, according to Yahoo Finance.