By Sarah Min and Joseph Wilkins, CNBC
Yields on longer-dated U.S. Treasurys rose on Wednesday, as traders weighed whether the Federal Reserve can keep inflation at bay following its latest monetary policy decision.
The 30-year Treasury bond yield jumped 10.5 basis points to 5.201%. It also hit its highest level since July 2007 at 5.244%. The benchmark 10-year note yield also climbed nearly 7 basis points to 4.671%.
Shorter-dated Treasurys rose, pushing yields lower. The 2-year yield traded 4 basis points lower at 4.236%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
The rate-setting Federal Open Market Committee left rates unchanged at the range of 3.5% to 3.75%. The move came with some opposition, however, with three policy members dissenting in favor of raising rates by a quarter percentage point.
“Chairman Warsh has described inflation as a ‘choice,’ but the Fed chose patience today amid conflicting data. Warsh asked for a ‘family fight,’ and he got one,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “For now, it’s likely that market pricing for a hike has simply been pushed forward. September remains a live meeting, and the incoming inflation data between now and then will be all that matters.
While Fed Chairman Kevin Warsh took over a Fed that has seen inflation exceed its 2% target since 2021, the consumer price index — a broad measure of inflation — posted an unexpected decline last month, bringing the annual inflation rate down to 3.5% in June. But in the weeks that followed, oil prices jumped again amid the escalating conflict in the Middle East.
“We’re reading this as a Committee with vocal hawks but the majority is siding with Warsh to keep rates stable until at least September when policymakers will have the benefit of the July and August CPI reports,” Ian Lyngen, BMO’s head of U.S. rates, said in a note.
Warsh stressed that the committee will be quick to act if inflation pressures accelerate.
“I want to stress, of course, that decisions by this committee matter a great deal, and where necessary and appropriate, we will not hesitate to act,” Warsh said in a press conference.
Energy prices spiked Wednesday after President Donald Trump told a Fox News reporter that the U.S. will be hitting Iran “hard” in response to the surprise attacks. West Texas Intermediate crude futures advanced 6.6% to settle at $84.46 a barrel.
Iran targeted American forces in the Middle East with ballistic missiles, U.S. Central Command said late Tuesday. Centcom in a post on X said that the attack originated from Iran, but all missiles were intercepted.
— CNBC’s Jessica Dickler also contributed to this report.
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