The yield on the 10-year U.S. Treasury note surged past 4.7% today, as investors anticipate that the Federal Reserve will raise interest rates as soon as September, following Fed Chair Kevin Warsh's commitment to fighting inflation. As of 11:19 p.m. Thai time, the 10-year Treasury yield stood at 4.720%, while the 30-year Treasury yield was at 5.209%. Investors have increased their expectations that the Fed will move up its rate hike to September, from an earlier forecast of October, after Warsh's speech. The latest FedWatch Tool from CME Group indicates that investors assign a 59.5% probability that the Fed will raise rates by 0.25% at its September meeting, up from 35.4% yesterday. Additionally, investors assign a 40.5% probability that the Fed will hold rates at 3.50-3.75% in September, down from 64.6% yesterday. In his speech at the Fed's annual symposium in Jackson Hole, Wyoming, today, Warsh expressed concern that inflation remains elevated, stating, "Although the PCE and CPI readings this summer have come in better than expected, they do not convince me that the underlying inflation trend has improved significantly." He added, "We need to be confident that underlying inflation is moving clearly and sufficiently fast toward our target. If not, we still have work to do. That is our duty, our mission, and what we must continue to do." "Throughout my tenure as Fed Chair, my colleagues and I will strive to build more credible models and stronger rules to guide our policy decisions. We will do so while recognizing that accuracy in economic forecasting is what we aspire to achieve." Meanwhile, Cleveland Fed President Beth Hammack reiterated her stance in favor of rate hikes, stating that recent inflation data shows the Fed is still far from its inflation target. Hammack noted that a report released on Wednesday showed inflation remains at 3% year-over-year, and although the monthly pace of price increases has slowed in recent months, she believes the Fed should tighten monetary policy further. "I don't want to prejudge anything, but I believe it's time for the Fed to act," Hammack said in an interview with CNBC at the Fed's annual symposium in Jackson Hole, Wyoming. "I believe we've been in an inflationary environment for over five years, inflation is well above our target, and when I look at financial conditions and talk to those in the markets, I don't see current monetary policy as sufficiently tight." These comments align with Hammack's previous stance. At the Federal Open Market Committee (FOMC) meeting in July, Hammack was one of three committee members who dissented against the decision to hold the policy rate at 3.5%-3.75%, with all three favoring a 0.25% rate hike. Hammack said she still believes the Fed needs to act to address inflation that is pressuring household budgets. "The longer inflation stays above our target, the harder it will be to bring it down, and the more pain consumers and businesses will endure." "For me, the real problem with missing our inflation target for so long is the risk that inflation expectations or habits become deeply entrenched in the public's mindset."
Fed rate hike expectations rise, pushing policy rate higher.
Fed rate hike bets drive 10-year Treasury yield up.
Fed rate hike expectations lift 30-year Treasury yield.
