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U.S. Treasury yield curve 'twist' reflects view Fed may not hike again
By Gertrude Chavez-Dreyfuss
Reuters
Friday, July 31, 2026
NEW YORK -- A sharp shift toward a steeper U.S. Treasury bond curve following the Federal Reserve's decision to leave interest rates unchanged this week has raised concerns about the central bank's credibility and willingness to fully confront inflation.
The drop in front-end yields, even as those on longer tenors climbed, suggests growing skepticism that the Fed will raise rates again, analysts said, despite Chair Kevin Warsh's insistence on Wednesday that policymakers "will not hesitate to act" if price pressures fail to ease.
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After the Fed left rates steady, despite three officials dissenting in favor of a hike, Treasury yields initially fell across maturities as investors welcomed the absence of an immediate rate increase.
That reaction quickly gave way to a more striking pattern. Yields on shorter-dated Treasuries continued to decline while those on longer-dated notes and bonds surged, particularly at the 30-year end of the curve, which soared to its highest in 19 years. The result was a pronounced steepening of the yield curve that some investors interpreted as a sign markets are losing confidence in the Fed's commitment to fight inflation. ...
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