Bond Market Blasts Fed for Inaction Amid Soaring Yields

The bond market is sending a clear message to Fed Chair Kevin Warsh and the FOMC: it's time to act. Despite the removal of forward-looking guidance from Federal Open Market Committee (FOMC) meeting statements, yields on long-term Treasury bonds have been steadily climbing.

One reason for this trend is the massive federal debt, which surpassed $40 trillion for the first time last week. Higher yields signal that these deficits aren't sustainable.

The bigger catalyst, however, is Trumpflation - the effects of President Donald Trump's tariffs and the Iran war on consumer prices. The price stickiness of Core Personal Consumption Expenditures (PCE) indicates that Trumpflation has spread beyond the energy sector.