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Treasury Yields Climb as Fed Chair Warsh Says Prices Remain High

Published Jul 1, 2026
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Summary:
  • The benchmark 10-year Treasury note's yield rose 4 basis points to 4.463% after Fed Chair Kevin Warsh's statement that prices are still elevated.
  • A weaker-than-expected ADP report revealed just 98,000 private-sector jobs were added in June, missing the 110,000 consensus estimate.
  • CME FedWatch data indicates a 63% likelihood of at least a quarter-point rate increase at the Fed's September meeting.

Market Reaction to Warsh's Comments

Warsh spoke on Wednesday at the European Central Bank's yearly policy conference held in Sintra, Portugal.

Traders sold off government bonds, pushing yields up. Meanwhile, the 2-year note gained roughly 2 basis points to 4.154%, and the 30-year bond yield climbed 6 basis points to 4.965%.

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Warsh's comments, delivered by the recently appointed central bank chief, fuel an ongoing discussion about whether the Fed's current policy stance is tight enough. While inflation has eased from its peak, it remains above the Fed's 2% target. The mixed signals from the labor market - strong official payrolls in previous months but a softer ADP reading - complicate the outlook.

Investors are now closely watching Thursday's government jobs report for further clues on the economy's trajectory and the Fed's next move. The Sintra forum, which gathers central bankers from around the world, often serves as a stage for policy signals, and Warsh's hawkish tone stood in contrast to some peers who have hinted at a potential pivot.

Mixed Signals from Economic Data

Warsh also said: "There's a lot of late breaking news on a series of these things, and we get into that room and shut the door, we're going to have the good debate. But I don't have much more for you than that." Warsh refrained from offering any clues about the Fed's policy direction before the July meeting.

The annual ECB conference in Sintra has historically been a venue where central bankers provide hints on future monetary policy. Warsh's decision to reiterate concerns about persistently high prices aligns with the Fed's recent cautious stance, even as other major central banks, such as the European Central Bank, have signaled possible rate cuts later this year. This contrast underscores the divergent paths global monetary policymakers are considering.

What Investors Are Pricing In

According to the CME FedWatch Tool, there is a 70.6% probability that the Fed will hold rates steady in July. The same tool also shows a 63% chance that the Fed will impose a rate increase of at least a quarter point when it meets in September.

The next big clue will come Thursday morning, when the government releases its official monthly jobs report.

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