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00:00[CC may contain inaccuracies] Treasury Secretary Janet Yellen also issued the warning that unacceptably high inflation is now locked in for the rest of the year. Take a listen. Well we have had high inflation in the first half of this year and locks on high inflation really for the entire year. But I do expect in the months ahead both the pace of inflation is likely to come down. Also remembered there are so many uncertainties relating to global developments. What does that mean. Yield swings are here to stay. It certainly means that the Fed is not going to be dissuaded from its course of increasing interest rates quite a lot. They seem to have an objective of getting the Fed funds rate up to at least 3 percent probably a bit higher by the end of the year. And inflation is enemy number one now in the United States. It's become a political issue as well which makes it even more difficult for the Federal Reserve to do anything but keep on raising interest rates so we can fully expect at least 50 basis points maybe another 75 basis points at the next meeting. And we're going to be having large increases all the way through to the end of the year. There's no way that Jerome Powell can afford to relax when he's got the treasury secretary speaking about inflation in that way. It's very clear that it's a big problem for the United States and for many other countries around the world. So until they show that they're being aggressive enough to try and get ahead of that inflation data then there's nothing they can do about it. We will see the Treasury market take the brunt of that. Probably means we'll see you go a bit higher. The curve slightly more possibly got inverted because the short end will take most of the pain. But that's going to mean that equities will have a headwind for quite a while. The Treasury market will not be friendly to the equity market.

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Yellen Says High Inflation Locked In for the Rest of 2022

Janet Yellen said that “unacceptably high” prices are likely to stick with consumers through this year. Mark Cranfield discusses what the Treasury Secretary's comments mean for the Federal Reserve on Bloomberg Television. (Source: Bloomberg)

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