Treasury Yields May Tighten Conditions but Won’t Replace Fed Rate Policy

Rising Treasury yields may tighten financial conditions, but they will not remove the Federal Reserve’s need to raise rates later this year to fight inflation, FedWatch Advisors founder Ben Emons said. The selloff in U.S. government debt has lifted Treasury yields, and Emons said the move may contribute to tighter financial conditions. He said yields could rise further, with persistently high energy prices and the risk of a prolonged conflict in Iran among the main drivers. Emons said higher yields can play a part in tightening conditions but cannot take over the Fed’s role in addressing inflation. He said that effort still requires the central bank’s interest-rate policy, including possible rate increases later this year. Enna Lee reports on investing and digital-asset markets for TokenPost.

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