FX.co ★ US 10Y Yield Holds Firm on Hawkish Warsh Remarks

The yield on the 10-year US Treasury note hovered around 4.7% on Monday after climbing for three straight sessions, as hawkish comments from Federal Reserve Chair Kevin Warsh led traders to ramp up expectations of an imminent interest rate hike. In his Jackson Hole speech on Friday, Warsh cautioned that inflation is not slowing in a meaningful way and reaffirmed policymakers’ resolve to return inflation to the 2% target. Markets are now assigning roughly a 57% probability that the Fed will raise rates by 25 basis points in September, up from about 40% a week earlier. A surprise upward revision to the University of Michigan consumer sentiment index also helped push US Treasury yields higher. Investors are now focused on Friday’s August jobs report for clearer signals on the path of US monetary policy.