Warsh Silence and Yen Intervention Send US Yields Soaring

The 30-year Treasury yield has surged above 5%, its highest since 2007, and held there for over 27 consecutive days. This marks a 'double whammy' to global markets, according to Rajeev De Mello of Gama Asset Management.

The yield climb is linked to the confirmation of Kevin Warsh as Fed Chair on May 13, 2026, and his preference for sparse public communication. Investors are now left guessing where the committee stands, with an unusually high number of Fed officials favoring an immediate rate hike.

Core inflation is not cooperating, with the Fed's preferred gauge sitting at a 12-month high. This has led to yield-curve steepener trades in 5s and 7s versus 30s by Ranjiv Mann of Allianz Global Investors, who warns that the risk is that the Fed could end up getting behind the curve.

The second trigger for the market's reaction came from Treasury Secretary Scott Bessent, who signed off on US support to help Japan prop up the yen. This coordinated intervention in almost 30 years has signaled that Washington now wants a weaker dollar or at least a stronger yen.