Bond Market Warns Warsh: Inflation Risks Mount as Yields Spike

The bond market is sending a warning to Kevin Warsh, the newly appointed Fed Chair, about inflation. After the central bank's July policy meeting, Warsh announced that interest rates would remain unchanged and forward guidance on future rate hikes would be withheld until the end of the year.

This dovish tone was met with a sell-off in US Treasurys, causing yields to spike. The 30-year US Treasury yield reached its highest level in 19 years at 5.24% on Thursday morning, while the benchmark 10-year US Treasury yield rose as high as 4.71%.

Investors are concerned that the Fed's decision may not be restrictive enough to contain inflation, which could push price growth higher and lead to even higher rates in the long run. This sentiment is reflected in the market's reaction, with all three major indexes sinking into the red on Thursday.

Some economists and analysts have questioned Warsh's comments during the press conference, suggesting that the Fed may be losing credibility by not taking more decisive action against inflation.