Fed Minneapolis President Kashkari Says Treasury Market Still Working as It Should

Federal Reserve Bank of Minneapolis President Neel Kashkari downplayed recent concerns that rising U.S. Treasury yields could disrupt monetary-policy deliberations.

Bloomberg

Treasury yields climbed last week, with the benchmark 10-year note ending the period near 4.73 % and the 30-year note hovering at its highest level since 2007. At the Federal Open Market Committee (FOMC) meeting in July, policymakers left the target federal-funds rate unchanged for the fifth consecutive meeting. Kashkari was one of three officials who dissented, favoring a quarter-point rate hike because of persistent inflation worries.

Bloomberg

• 10-year Treasury yield: ~4.73 % (latest week)

Bloomberg

• 30-year Treasury yield: near 2007 peak (exact level not disclosed)

Bloomberg

• July FOMC meeting: rates unchanged for five straight meetings

Bloomberg

• Kashkari’s dissent: advocated a 0.25 % increase

Bloomberg

Kashkari reiterated his inflation concerns but stopped short of calling for another hike at the upcoming September meeting.

Bloomberg

• “There’s every indication that the US Treasury market is functioning as it should, that trades are taking place, that there’s liquidity in the market, and so that enables us to focus on the federal funds rate as our primary policy tool to get inflation back down,” — Neel Kashkari, of minneapolis president

Bloomberg

The Fed’s next policy meeting is scheduled for September, where the new chairman, Kevin Warsh, is slated to deliver a keynote address at the annual Jackson Hole symposium. Market participants will watch for any shift in the Fed’s stance as new inflation data emerge.

Bloomberg