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

Odaily Planet Daily News The recent violent fluctuations in the US Treasury bond market have presented an important early test for incoming Federal Reserve Chairman Kevin Warsh.

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

Rajappa pointed out that the surge in energy prices triggered by the war with Iran is intensifying inflationary pressures in the US. This will limit Warsh's room to push for interest rate cuts, a policy direction that he himself has previously supported and that US President Donald Trump has demanded. She stated bluntly: "I'm starting to get a little worried because bond yields do look a bit out of control. We should pay serious 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. As recently as February 27, the day before the US and Israel launched military action against Iran, the market was widely betting on more than two rate cuts within the year. (Jin Shi)