#美联储称国债市场运作正常 Dollar hovers at a three-month low: Kashkari says the Treasury market is “fine,” but the market remains “sceptical”

On Monday (August 24) during Asian trading hours, the U.S. Dollar Index fluctuated at low levels, currently trading near 98.80 and hovering around its lowest level since mid-May.
As the dollar hovers at a three-month low, Federal Reserve officials’ assessment of the Treasury market has become a key market focus.
Minneapolis Fed President Kashkari said Sunday (August 23) that the recent rise in Treasury yields reflects well-functioning markets and ample liquidity, rather than policy concerns. His remarks played down claims that a surge in long-term yields could trigger market dysfunction. The 10-year Treasury yield closed last week near 4.73%, while the 30-year yield approached its highest level since 2007.
Kashkari reiterated his concerns about inflation but did not commit to pushing for a rate hike at the September meeting, keeping the outcome a “genuine suspense.”
Market attention is now turning to new Fed Chair Warsh’s speech in Jackson Hole on Friday, which may be viewed as a more significant policy signal than remarks made over the weekend by any regional Fed president.

Kashkari: Rising yields reflect well-functioning markets, not policy concerns
Minneapolis Fed President Kashkari said Sunday that the recent rise in Treasury yields is unlikely to affect the Federal Reserve’s monetary policy deliberations.
He said all signs indicate that the Treasury market is operating normally, with trading proceeding smoothly and liquidity remaining ample, allowing policymakers to focus on the federal funds rate as the primary tool for bringing inflation back to target.
His remarks came as yields rose across the curve last week—the 10-year Treasury yield closed near 4.73%, while the 30-year yield approached its highest level since 2007.
Kashkari acknowledged that yields are high relative to recent history, but noted that yields were higher in the 1990s, characterizing current levels as “high but not historically extreme.”

Inflation concerns persist, but no commitment to a September rate hike
Kashkari’s remarks came on the eve of the Fed’s September policy meeting, and his wording prompted close market scrutiny. Officials held rates unchanged for the fifth consecutive time in July, with Kashkari one of three dissenters who supported a 25-basis-point rate hike on the grounds that the ongoing risk of inflation had not been eliminated.
In Sunday’s speech, he again emphasized his concerns about inflation, explicitly saying that he currently has “no confidence” that inflation will return to the 2% target in the short term. The remarks continued his previously hawkish stance but did not translate into a clear commitment ahead of the next meeting.
He said more economic data is needed before the September meeting, including the latest readings on employment, consumption, and prices, and therefore declined to prejudge whether he would dissent again or push for a rate hike. This wait-and-see stance reflects the increasingly complex trade-off within the Fed between persistent inflation and slowing economic growth. While Kashkari maintained that inflation risks remain, he also acknowledged that the policy path is highly data-dependent rather than predetermined.
The market interpreted this to mean that even though some officials remain alert to price pressures, the hurdle for another rate hike in the short term has risen significantly. By reiterating concerns while refusing to prejudge the outcome, Kashkari kept the September meeting’s policy options open and forced investors to continue monitoring how subsequent data will actually affect the rate path.

Can Kashkari’s “reassurance” stabilize the dollar?
Kashkari’s “reassuring” remarks on the Treasury market had a complex impact on the Dollar Index, presenting a mixed picture of bullish and bearish factors. On the one hand, he played down concerns that the surge in long-term yields indicated market dysfunction, saying that the Treasury market is functioning normally and has ample liquidity. This somewhat eased panic over a “crisis of confidence” in Treasuries.
The Dollar Index closed last week near 98.80, hovering around its lowest level since mid-May. The signal that the Treasury market is functioning normally may provide some downside support for the dollar—at least preventing a larger-scale sell-off triggered by Treasury market dysfunction.
On the other hand, Kashkari reiterated his inflation concerns without committing to a September rate hike, leaving the Fed’s policy path uncertain. This is a “double-edged sword” for the dollar: no rate hike means its interest-rate differential advantage is unlikely to widen further, leaving the dollar without upward momentum; but if inflation continues to exceed expectations, the market may reprice the probability of a rate hike, thereby supporting the dollar.

Market focus shifts to Warsh’s Jackson Hole speech
This week, the market is rapidly shifting its attention from Kashkari’s weekend remarks to new Fed Chair Warsh.
He will deliver a keynote speech at the annual symposium in Jackson Hole, Wyoming, on Friday, an event long regarded as an important window into the policy outlook.
Compared with Kashkari’s personal views, Warsh’s remarks as the new chair clearly carry greater weight for the policy outlook, and the market expects his wording could directly influence pricing for the September meeting and beyond.
The current path of Treasury yields and the inflation trajectory remain the two core variables. Their interaction is turning the September meeting from a routine discussion in form into a genuine decision point.
If Warsh emphasizes in his speech that inflation risks still warrant vigilance and suggests that policy needs to remain restrictive, the market may reprice the probability of a rate hike or rates remaining high for longer. Conversely, if he focuses more on balancing economic growth and employment, it could reinforce earlier pricing of rate-cut expectations.
Jackson Hole speeches have traditionally carried strong signaling value. Particularly at the start of a new chair’s tenure, his remarks will be viewed as an initial indication of the future policy framework.

Summary
Kashkari’s remarks Sunday played down concerns over the surge in long-term yields, saying that the Treasury market is functioning well and has ample liquidity. The 10-year Treasury yield closed near 4.73%, while the 30-year yield approached its highest level since 2007. He reiterated concerns about inflation but did not commit to a September rate hike, keeping the meeting outcome uncertain. ‌The market is now turning to Warsh’s Jackson Hole speech on Friday, which could be a more significant policy signal than remarks from any regional Fed president. The paths of yields and inflation remain unresolved, making the September meeting a genuine decision point.$US500 ‌