STOCKS | Short-Term U.S. Treasury Yields Jump as Warsh Reassures Markets on Inflation Fight

Federal Reserve Chair Kevin Warsh said the central bank needs to curb rising prices, easing some market concerns about his credibility in fighting inflation and pushing short-term U.S. Treasury yields higher. According to Sina Finance, during Warsh's speech at the annual Jackson Hole symposium in Wyoming, short-term Treasuries fell while longer-dated Treasuries rose. The 2-year yield rose 5 basis points to 4.28%, while the 30-year yield fell 1 basis point to 5.19%. According to Sina Finance, both moves reflected market expectations that the Federal Reserve may need to raise short-term interest rates. Since Warsh held his first press conference in June, bond traders have questioned his policy stance. According to Sina Finance, he had stressed the need to bring down inflation and struck a broadly hawkish tone. Inflation in the United States has remained above the Federal Reserve's 2% target since the global economy emerged from the pandemic shock in 2021. After the Federal Reserve left rates unchanged again in July and Warsh declined to clearly signal whether a rate hike was possible this year, long-term Treasury yields rose sharply as traders demanded higher returns to compensate for the risk that inflation would stay elevated. According to Sina Finance, Warsh warned on Friday that inflation has not slowed materially and said policymakers must be convinced it is declining, or the Federal Reserve still has work to do. He also reiterated that the Federal Reserve will return inflation to its 2% target and said the goal is firm and fixed.