Fed Holds Rates for Fifth Straight Time... 30-Year Bond Yields Soar

Three Members Vote for Hike, Signaling Hawkish Hold
Inflation Fears Weigh on Bonds and Asset Markets

The U.S. Federal Reserve (Fed) kept its benchmark interest rate unchanged for a second consecutive time under Chairman Kevin Warsh at the Federal Open Market Committee (FOMC) meeting held on the 29th (local time). Although the rate was held steady, three committee members called for a rate hike, leading to the meeting outcome being interpreted as a "hawkish hold" (signaling a preference for monetary tightening). Mounting concerns over persistent inflation negatively impacted the bond and asset markets.

Kevin Wash, Chairman of the U.S. Federal Reserve (Fed), is speaking at a press conference on the 29th (local time). Photo by AP News

Following the regular FOMC meeting, the Fed announced that it decided by a 9-to-3 vote to maintain its target range for the federal funds rate at the current level of 3.50% to 3.75% per annum. This marks the fifth consecutive hold since January. Unlike last month, when the rate decision was unanimous, votes were split this time. In its statement, the Fed explained, "Economic activity is expanding at a solid pace despite uncertainties stemming from conflicts in the Middle East," adding that "productivity growth and capital investment are strong, job gains are keeping pace with labor force growth, and the unemployment rate has changed little." Regarding inflation, the central bank stated, "Inflation remains elevated relative to our 2% target," and reaffirmed its hawkish stance by stating that "the Committee will achieve price stability."

Notably, Beth Hammack, President of the Federal Reserve Bank of Cleveland; Neel Kashkari, President of the Federal Reserve Bank of Minneapolis; and Lorie Logan, President of the Federal Reserve Bank of Dallas, voted against the hold, arguing that the benchmark interest rate should be raised by 0.25 percentage point.

Rising concerns about further rate hikes in response to inflation pushed the yield on the 30-year U.S. Treasury bond to its highest level since 2007. On this day, the yield on the 30-year Treasury surged to 5.21% immediately after the New York Stock Exchange closed, up 0.11 percentage point from the previous session (meaning bond prices fell). At one point, yields nearly reached 5.3%. This is the highest level in 19 years since July 2007, before the global financial crisis. The hawkish hold also rattled the U.S. stock market. The Dow Jones Industrial Average dropped by 2.19%, the S&P 500 Index declined by 1.52%, and the tech-heavy Nasdaq finished down by 1.74%.

This content was produced with the assistance of AI translation services.