Fed’s first rate hike may not curb rising long-term bond yields: MarketWatch

MarketWatch reports that historical trends suggest the Federal Reserve’s initial interest rate hike may not effectively curb the rapid rise in longer-term bond yields. This analysis comes amid an environment where the 10-year Treasury yield has recently reached levels not seen since 2007, hovering around 5.01%. The 30-year Treasury yield has also been elevated, above 5.3%. These developments occur as the Fed contemplates its monetary policy strategy in response to these rising long-term yields. Market activity surrounding the potential Fed decisions from June to September indicates a significant shift in expectations. Currently, market pricing suggests a low likelihood of a pause in the Fed’s rate decisions, with a mere 12% probability for a pause-pause-pause outcome. This reflects a broader sentiment that the Fed may continue to adjust rates in response to economic indicators, including persistent inflation pressures and elevated GDP growth. The context of rising yields and historical analysis of past Fed rate hikes suggests a complex scenario for central bank policy-making. Observers note that despite the Fed’s actions, controlling long-term yields might remain challenging, poten...