U.S. Treasuries soared Friday morning as traders focused on pricing in interest rate policy under new Federal Reserve Chairman Kevin Warsh following a week of mixed inflation data.
yield of 30 year bond Yields rose 8.6 basis points to just under 5.1%, the highest level since May 22, 205, and near the highest level since October 2023.
yield of 10 year treasury The note, the main benchmark for U.S. borrowing, rose 7 basis points to 4.55%.
on the other hand, 2 year Treasury bill The yield, which tends to react in line with the Fed’s short-term interest rate decisions, rose more than six basis points to 4.06%.
One basis point equals 0.01%, and yield and price are inversely proportional to each other.
The jump in yields comes as Mr. Warsh, who was confirmed by the Senate on Wednesday, grapples with an increasingly complex inflation situation. President Donald Trump continues to push for interest rate cuts, even as data on consumer prices and imports show prices are rising.
According to reports this week, the consumer price index inflation rate was 3.8%, the highest level since May 2023. Similarly, producer prices, which measure wholesale costs and indicate pipeline inflation pressures, were at 6% annually, the highest level since late 2022.
Import costs also rose 1.9% in April and 4.2% on a 12-month basis, data released Thursday by the Bureau of Labor Statistics showed, as conflicts in the Middle East drove up energy prices and prompted importers to raise costs. The annual increase in import prices was the largest since October 2022, and the 8.8% rise in export costs was the highest since September 2022.
Peter Boockvar, chief investment officer at One Point BFG Wealth Partners, said in a morning note that the bond market movement was a reminder that “inflation is still a problem, debt and deficits are still a problem (especially in the UK), and sovereign debt, which is heavily held by foreigners, is now the source of funding.”
“Right now, long-term interest rates control monetary policy,” he added. “We wish Kevin Warsh all the best…but he will still be subject to the macro circumstances around him.”
US bond market problems also reflect ongoing fiscal challenges in the US
The government recorded a $215 billion budget surplus in April, which is typical for the month in which tax collection begins, but was 17% lower than the same month in 2025. Fiscal problems remain an issue, as the $97 billion spent on debt interest was the second-highest expense after Social Security.
Rising yields are not just a US problem
German Bundestags rose as well, with the 10-year yield at 3.127%, while the benchmark Japanese government bond rose 7 basis points to 2.69%.
Statistics expected to be released later on Friday include the Fed’s monthly industrial production report and the latest April New York Manufacturing Activity Index.
