Unlike Markets, Fed Isn’t Too Worried About 5% Yields — Yet
- Rise in yields is consistent with goal for tighter conditions
- Fed takes a wait-and-see approach in monitoring market moves
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The jump in US Treasury yields above 5% on Monday set off renewed investor tumult but is unlikely to trigger concerns at the Federal Reserve unless the rise becomes more volatile or persistent.
Yields on 10-year Treasuries exceeded 5% for the first time since 2007 on Monday then retreated. They have surged a full percentage point since early August as policymakers signaled rates will stay higher for longer. For now, officials in the Federal Open Market Committee see the continued run-up in borrowing costs as a feature of their bid to tame inflation rather than a drawback, as tighter financial conditions help cool economic growth.