US Yields Climb as Fed’s Powell Reinforces Commitment to Addressing Inflation

Following Federal Reserve Chair Jerome Powell’s speech, which reinforced the central bank’s dedication to addressing inflation and achieving the 2% target, US Treasury yields experienced a rise. The yield curve inversion between two-year and 10-year Treasury notes intensified, implying that investors expect further rate increases by the Fed.

Powell acknowledged the moderation of inflation since the previous year but noted that inflationary pressures persist and attaining the 2% target will require time. His comments suggested that a rate cut in 2023 is improbable. After the speech, the market projected a 76% likelihood of a rate hike next month.

Consequently, various US Treasury yields, including 30-year bond yields and two-year yields, went up. Breakeven inflation rates also rose across multiple sectors, with the one-year sector experiencing a particularly notable increase.