Walsh emphasized anti-inflation, US short-term Treasury yields rose.

U.S. short-term Treasury yields rose. In a closely watched speech, Federal Reserve Chair Waller emphasized that the Fed needs to curb consumer price increases, easing some market concerns about its ability to fight inflation. During Waller’s speech, short-term U.S. Treasuries were sold off, while long-term U.S. Treasuries rose. The two-year Treasury yield climbed 5 basis points to 4.28%, and the 30-year yield fell 1 basis point to 5.19%. Both moves indicate that markets expect the Fed may need to raise short-term interest rates. Since Waller held his first press conference in June, bond traders have had doubts about his policy stance. Back then, Waller stressed the need to bring down inflation and took a hawkish stance. Since the global economy reopened from the pandemic in 2021, U.S. inflation has remained above the Fed’s 2% target. But in July, the Fed kept rates unchanged again, and Waller did not reveal whether a rate hike this year is possible. Subsequently, long-term U.S. Treasury yields rose sharply as traders demanded higher returns to compensate for the risk of rising inflation. Waller warned on Friday that inflation has not shown meaningful slowdown, and said policymakers must be confident that inflation is improving, otherwise the central bank “has more work to do.” He also reiterated that policymakers will pull inflation back to the 2% target, stressing that this goal is clear and fixed.