U.S. Treasury Yield Surges Across the Board as Yellen Yet to Take Office, Bond Market Anticipates Fed's "Rate Hike"

BlockBeats News, May 15th. Prior to the official inauguration of the new Federal Reserve Chair Kevin Wash, the U.S. Treasury market saw a significant uptick, with the overall yield curve rising and market expectations for the interest rate path tightening noticeably.

Data shows that the U.S. 2-year Treasury yield rose to 4.065%, hitting a new high since March 2025; the 10-year yield rose to 4.530%, reaching its highest level since May 2025; and the 30-year yield surpassed 5.071%, marking a new high since July 2025, with rates at both ends of the curve moving up simultaneously.

Analysts pointed out that the short-term rates have exceeded the upper limit of the Fed's target rate range, indicating that the market is "prematurely tightening financial conditions" through the rising yields as a form of "bond vigilante" behavior, indirectly constraining policy space by raising funding costs.

The market generally believes that with lingering inflation pressures, rising energy prices, and the impact of geopolitical conflicts, U.S. inflation stickiness is strengthening, leading to a further postponement of rate cuts. CME rate futures indicate that keeping rates unchanged throughout the year remains the baseline scenario, with the probability of rate hikes also increasing.

At the same time, the U.S. consumer end is notably affected by the rise in oil prices, with CPI approaching 4%, further weakening the loose monetary policy conditions.

Analysis suggests that the divergence between the bond market and policy expectations is widening, and the new Federal Reserve policy cycle may already be subject to a "reverse constraint" from the market interest rate environment before it formally begins.