US long-term interest rates continue to hold at elevated levels. Amid expectations of an early additional rate hike by the Federal Reserve and expanding investment in artificial intelligence, bond selling accelerated sharply in the market, and the yield on the 10-year US Treasury note, the benchmark for long-term rates, surpassed the 5% mark on the 23rd, reaching its highest level in 19 years. The Fed, which decided on its first rate hike in about three years in the middle of this month, has tilted hawkish and is inclined toward further tightening. Cleveland Fed President Hammack expressed concern that underlying inflation is high, and New York Fed President Williams voiced support, saying that expectations of an additional rate hike within the year seem reasonable. The interest rate futures market is pricing in roughly three more rate hikes. With the midterm elections approaching in November, keeping interest rates in check is a key issue for the Trump administration as it pursues affordability, but with federal government debt having surpassed 40 trillion dollars and continuing to swell, no effective measures are in sight, and headwinds are blowing against the administration. President Trump has demanded that the Fed lower interest rates promptly, and Treasury Secretary Bessent led an unconventional move to expand buybacks of long-term government bonds aimed at suppressing interest rates, but the effect did not last, and some in the market are voicing skepticism that it was a failure.
Fed has turned hawkish and is inclined toward further tightening, with markets pricing roughly three more rate hikes, pushing the effective fed funds rate higher.
10-year Treasury yield surpassed 5% for the first time in 19 years amid Fed hawkishness and accelerating bond selling.
