2-year Treasury yield jumps after Warsh flags possible Fed rate hike

Treasury yields rose sharply at the short end after Kevin Warsh used a Jackson Hole speech to warn that the Federal Reserve may still need to tighten policy if inflation does not ease fast enough. The 2-year Treasury yield climbed more than 12 basis points to 4.356%, while the 10-year yield rose more than 5 basis points to 4.726%. Warsh said recent summer readings were better than expected but did not show that underlying inflation had “meaningfully improved.” He also reaffirmed the Fed’s 2% target as a “firm, fixed target.” CME FedWatch data showed markets lifting the implied probability of a September rate increase to 57.5% from 35.4% a day earlier as investors recalibrated expectations ahead of the mid-September meeting.