Bond Market Sends Warning as Yields Surge Past 19-Year High

The bond market is sending a warning to Kevin Warsh after the Fed's latest policy meeting. Bond yields rose to new heights, with the 30-year US Treasury yield spiking beyond 5.2%, its highest level in nearly two decades.

This increase reflects investors' growing concerns that the Fed may not be doing enough to contain inflation. The benchmark 10-year US Treasury yield also jumped post-presser, rising as high as 4.71% and remaining above the critical 4.5% threshold for most of the last month.

Fed Chair Warsh struck a dovish tone after the meeting, announcing that rates would remain unchanged and withholding forward guidance on where rates were headed through the end of the year. This decision led to a sell-off in US Treasurys, with investors worried about inflation running out of hand.

Investors are no longer feeling confident that the Fed has a firm grip on inflation, particularly considering oil prices reclaimed the critical $100-a-barrel mark earlier this month. The market's logic goes something like this: if rates may not be restrictive enough to contain inflation, it could push price growth swiftly higher, leading to higher rates in the long run.