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2026-05-22 23:15:29
[Federal Reserve Governor Waller's statement that the Fed needs to abandon its easing policy stance triggers a sharp drop in US Treasury bonds] (1) Federal Reserve Governor Waller stated that due to inflation risks, the Fed needs to abandon its easing policy stance and stop sending signals of interest rate cuts. There is still room for future interest rate hikes, and if inflation expectations get out of control, the Fed will raise interest rates decisively. (2) He said that the current labor market is trending towards balance and is difficult to influence monetary policy. The development of artificial intelligence has not changed the existing pattern. High energy prices have not suppressed consumption, but inflation has exceeded the target for six consecutive years, and the risk of rising inflation is significant. (3) These remarks triggered a sharp drop in US Treasury bonds, and the market bet that the probability of a 25 basis point interest rate hike this year has risen to 90%. The yield curve is narrowing rapidly, and market selling has intensified. The 2-year US Treasury yield fell below the 4.10% mark, triggering programmed selling. The 5-year, 10-year and long-term bond yields stabilized at the support levels of 4.26%, 4.59% and 5.11%, respectively.
