Treasury Yields Go Opposite Ways Following Powell’s Speech

The 10-year Treasury yield rises to 3.67% while the two-year is lower, at 4.44%, after Chairman Powell’s remarks, a discrepancy Spartan’s Peter Cardillo attributes to expectations that the hiking cycle is almost over and rates would be held high for longer than previously thought. “He emphasized that the fight against inflation won’t be easy,” Cardillo says, adding Powell also didn’t say anything that would change market’s expectations of a maximum fed funds rate a little higher than 5%. But Cardillo challenges the higher-for-longer view. “Once the Fed realizes inflation is dropping faster, they will change that tune,” he says. “They don’t want the market to be exuberant.”