Warsh Stresses Inflation Fight, Short-End U.S. Treasury Yields Rise

On August 28, short-term U.S. Treasury yields rose. Fed Chair Warsh emphasized in remarks the need to curb consumer price increases, during which short-term Treasuries were sold off, with the 2-year yield climbing 5 basis points to 4.28% and the 30-year yield falling 1 basis point to 5.19%.

These moves signal that markets expect the Fed may need to raise short-term rates. Warsh warned that inflation has not shown a meaningful slowdown, stating that policymakers must be confident inflation is improving, otherwise "there is more work to do," and reiterated the goal of bringing inflation back to the 2% target. Since Warsh's first press conference in June, bond traders have harbored doubts about his stance; in July, the Fed held rates steady.

[TechFlow]