U.S. short-end Treasury yields are rising, with markets anticipating that the Federal Reserve may need to raise short-term interest rates

Odaily News U.S. short-term Treasury yields are rising. In a closely watched speech, Federal Reserve Chairman Warsh emphasized that the Fed needs to curb consumer price increases, thereby alleviating some market concerns about its ability to fight inflation.

During Warsh's speech, short-term Treasuries were sold off while long-term Treasuries rallied. The two-year Treasury yield rose 5 basis points to 4.28%, while the 30-year yield fell 1 basis point to 5.19%. Both moves indicate that markets expect the Federal Reserve may need to raise short-term interest rates. Bond traders have had doubts about his policy stance since Warsh held his first press conference in June. At that time, Warsh emphasized the need to curb inflation and adopted a hawkish stance.

Since the global economy reopened from the pandemic in 2021, U.S. inflation has remained above the Fed's 2% target. However, in July, the Fed again held interest rates steady, and Warsh did not indicate whether a rate hike is possible this year. Subsequently, long-term Treasury yields rose sharply as traders demanded higher returns to compensate for the risks posed by rising inflation. On Friday, Warsh warned that inflation has not shown meaningful signs of slowing and stated that policymakers must be confident that inflation is improving, or the central bank "still has work to do." He also reiterated that policymakers will bring inflation back to the 2% target, emphasizing that this goal is clear and fixed.