Incoming Federal Reserve chief Kevin Warsh could face significant hurdles in his push to reduce the U.S. central bank’s role in financial markets, as rising federal debt and weakening demand advantages for U.S. Treasuries complicate efforts to shrink the Fed’s balance sheet, according to analysts and economists cited by Reuters.
Reuters reported that Treasury yields climbed sharply on Friday, reflecting mounting investor concerns over inflation following the escalation of the U.S. conflict with Iran. The yield on the 2-year Treasury note, often viewed as a gauge of monetary policy expectations, has risen by more than 50 basis points since the conflict began and moved above 4%. Meanwhile, the 30-year Treasury yield crossed 5.1%, levels not consistently seen since before the 2007-2009 financial crisis.
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