FX.co ★ US 10-Year Yield Holds Steady at 5%

The yield on the 10-year US Treasury note traded around 5% on Thursday, hovering near its highest level since July 2007. The move came after the Federal Reserve raised interest rates for the first time in three years and signaled further tightening this year to rein in inflation. As expected, the FOMC unanimously lifted the federal funds rate by 25 basis points, to a range of 3.75%–4%.

Fed Chair Kevin Warsh reiterated that inflation remains elevated, a concern underscored by data released last week showing that core US inflation in August rose more than anticipated. Beyond inflation pressures driven by surging energy prices, Warsh noted that Treasuries are also under pressure as they compete for investor capital with an expanding supply of corporate debt.

Meanwhile, President Donald took to social media to call for rapid rate cuts to 1% or lower, although he stopped short of directly criticizing Warsh.