Government Borrowing Cost Hits Two-Decade High After Fed Rate Decision

“The market is concerned that the Fed not hiking is going to result in persistently higher inflation,” said Subadra Rajappa, an interest rate strategist at Société Générale.

Investors have become concerned about resurgent inflation, with the Iran war pushing up oil prices, and rampant spending on artificial intelligence infrastructure driving up prices in the broader economy.

For months, those inflation worries had remained fairly short-term, pushing up yields on short-dated Treasuries. The moves in the 30-year yield on Wednesday suggested investors are now becoming concerned about inflation remaining higher for longer, even decades, to come.

The 30-year “breakeven rate,” a measure of the market’s inflation expectations over 30 years, rose on Wednesday by the most in one day since Nov. 6, 2024, the day after Donald Trump was re-elected president.

Mr. Warsh, in response to questions from reporters on Wednesday, reiterated his commitment to slowing inflation. But Ms. Rajappa noted that Mr. Warsh avoided giving details about how the central bank would act on that commitment, worrying some investors, especially after the central bank had just voted against raising interest rates at this week’s meeting.

Article source: https://www.nytimes.com/2026/07/29/business/economy/treasury-yields-fed-inflation.html