US Treasury yields jumped this week after a hawkish debut from new Fed Chair Kevin Warsh, with the short end leading the move.
Most published research pointed to higher front-end yields, citing the FOMC's revised dot plot (nine of 18 officials now pencil in hikes this year), the removal of forward guidance, and stronger May retail sales. Several notes flagged OIS markets pricing roughly 24bp of hikes by September, and one strategist argued the 2-year has further to climb as the Fed recommits to its 2% target. Structural drivers — heavy Treasury issuance to fund AI capex and defense, plus ongoing balance sheet runoff — were cited as reinforcing the upward pressure, with one year-end 10Y call at 4.65%.
A contrarian thread argued the long end tells a different story: 30Y and 10Y yields actually slipped post-FOMC as markets credited the Fed's inflation-fighting resolve, flattening the curve. A few analysts went further, suggesting traders are quietly buying SOFR on the view that the priced-in hikes won't materialize.
Mortgage rates, meanwhile, remained stuck near 6.6%.