Analysis: Signs of US Bond Yields Getting Out of Control, Walsh Faces a Major Test at the Start of His Term

Odaily Planet Daily News The recent sharp volatility in the US Treasury market presents a significant early test for incoming Federal Reserve Chairman Kevin Walsh.

Subadra Rajappa, Head of Americas Research at Societe Generale, said in a Bloomberg Television interview on May 15 that bond yield movements have shown clear anomalies due to expectations of accelerating inflation.

Rajappa pointed out that the surge in energy prices caused by the war with Iran is intensifying inflationary pressure in the US. This will limit Walsh's room to push for interest rate cuts, a policy direction he himself has previously supported and which US President Donald Trump has also demanded. She stated bluntly: "I'm starting to get a bit concerned because bond yields do look like they are getting out of control. We should pay close attention to the signals the bond market is sending."

Expectations in the interest rate market have also shifted rapidly. Data compiled by Bloomberg shows that traders now see nearly a two-thirds probability of the Fed raising interest rates by December. Just on February 27, the day before the US and Israel launched a military operation against Iran, the market was broadly betting on more than two rate cuts within the year. (Jinshi)