10-Year Treasury Yield Nears 4.75% as Warsh Sparks Doubts on Fed Inflation Resolve
Updated
Updated · Bisnow · Aug 1
10-Year Treasury Yield Nears 4.75% as Warsh Sparks Doubts on Fed Inflation Resolve
3 articles · Updated · Bisnow · Aug 1
Summary
10-year Treasury yields climbed 4 basis points after Wednesday’s Fed decision and flirted with 4.75% by Friday, as investors recoiled from Chair Kevin Warsh’s messaging rather than the rate hold itself.
Warsh’s comments left markets unsure the Fed would tighten further against stubborn inflation, even with core PCE still at 3.3% in June versus the central bank’s 2% target.
A 9-3 vote to keep rates unchanged sharpened that concern: Cleveland’s Beth Hammack, Minneapolis’s Neel Kashkari and Dallas’s Lorie Logan all dissented in favor of a quarter-point hike.
Higher long-dated yields are already pressuring commercial real estate, where 4.5% had been seen as a danger threshold and CMBS delinquencies rose 51 basis points to 7.86% in July.
Bank of America said the credibility hit could ironically raise the odds of a September rate hike, as the Fed tries to reassert its inflation-fighting stance.