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

Odaily reported that the recent severe volatility in the US Treasury market presents a significant early challenge for incoming Federal Reserve Chairman Kevin Walsh.

Subadra Rajappa, Head of US Rates Research at Société Générale, stated in a Bloomberg Television interview on May 15 that bond yield trends have shown clear anomalies due to expectations of accelerating inflation.

Rajappa pointed out that the surge in energy prices resulting from the war with Iran is intensifying inflationary pressures in the United States. This will limit Walsh's room to push for interest rate cuts—a policy direction he previously supported and which was also demanded by US President Donald Trump. She commented: "I'm starting to get a bit worried because bond yields do look like they're getting out of control. We should be paying serious attention to the signals the bond market is sending."

Expectations in the interest rate market have also shifted rapidly. According to data compiled by Bloomberg, traders now estimate there is nearly a two-thirds probability that the Fed will raise interest rates before December. Just on February 27, the day before the US and Israel launched military action against Iran, the market was widely betting on more than two interest rate cuts within the year. (Jin Shi)