"Yeah, I think he's 100% right, Payne began, arguing that rising Treasury yields are signaling renewed inflation fears and increasing pressure on the Federal Reserve to raise interest rates again. He pointed to the 10-year Treasury yield climbing from 4.3% to 4.6% in just two weeks since his last appearance on her show as evidence that markets are now pricing in higher inflation for longer."
"I'd also mention the Fed's fund rate is at 3.5 3.75%, inflation tracking at 4% right now, and Jeffrey made a really good point yesterday, you're into a point where you're going to have negative interest rates again, Payne said. He added: You mentioned that TINA trade There Is No Alternative' because there is so much money sitting in money market funds right now getting like 3.3 3.4% but if inflation's at 4[%], that's a real problem."
"The bond vigilantes have spoken, and what they're telling you is the Fed probably has to raise rates here just to keep inflation in check because, clearly, right now we're pricing in a much different market than we were just two weeks ago, he added, which is kin"
Rising Treasury yields are being interpreted as renewed inflation fears, increasing pressure on the Federal Reserve to raise interest rates. The 10-year Treasury yield reportedly climbed from 4.3% to 4.6% within two weeks, suggesting markets are pricing higher inflation for longer. The federal funds rate is described as around 3.5% to 3.75%, while inflation tracking is around 4%. With money market funds yielding roughly 3.3% to 3.4%, inflation above that level implies negative real interest rates. The view is that bond vigilantes signal the Fed likely needs to raise rates to keep inflation in check, especially as market expectations shift quickly.
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