U.S. Treasury yields soar across the board, before Wash takes office, the bond market first "raises interest rates"

BlockBeats News, May 15: As new Fed Chair Kevin Wosshang has not yet officially taken office, the U.S. Treasury market was the first to see a notable upward move. Treasury yields rose across the board, and market expectations for the interest-rate path tightened noticeably.

Data shows that the yield on the 2-year U.S. Treasury rose to 4.065%, the highest level since March 2025; the 10-year yield climbed to 4.530%, the highest level since May 2025; and the 30-year yield broke above 5.071%, a new high since July 2025, with short- and long-end rates rising in tandem.

Analysts said short-term interest rates are now higher than the upper limit of the Fed’s target rate range, indicating that the market is “preemptively tightening financial conditions” through higher yields. Some institutions describe this as “bond-market vigilante” behavior—i.e., indirectly constraining policy space by raising financing costs.

The market generally believes that, with inflation pressures still persisting, energy prices rising, and geopolitical tensions affecting the situation, U.S. inflation has become more stubborn, causing expectations for rate cuts to be pushed further back. CME interest rate futures show that keeping rates unchanged for the rest of the year remains the baseline scenario, and the probability of rate hikes is also increasing.

At the same time, the U.S. consumer side is being significantly impacted by the rise in oil prices. CPI is approaching 4%, further weakening the conditions for monetary policy easing.

Analysts believe that the divergence between the bond market and policy expectations is widening, and that the Fed’s new policy cycle may face “backward constraints” from the market interest-rate environment even before it is formally launched.