Treasury Yield Volatility + Fed Chair Shift + Debt Ceiling Brinkmanship
Key Questions
Why are Treasury yields volatile right now?
Weak 10-year and 3-year auctions with low bid-to-cover ratios and reduced foreign demand pushed 10-year yields to 4.44-4.46% and 30-year yields to 5.03%. Hot CPI readings at 3.8% and ongoing oil shocks contributed to the move higher.
What is happening with the Federal Reserve leadership?
Powell is expected to exit, with Warsh viewed as a more hawkish successor under Trump pressure. Markets now price no rate cuts until 2027.
How might the debt ceiling situation unfold?
Negotiations face a September 30 shutdown risk and October brinkmanship, with warnings from Bessent and large foreign sales by Japan and China. The Treasury faces a $9-15 trillion rollover need by 2026.
Weak 10yr/3yr auctions (tailing/2.54 bid-to-cover/low foreign 63.95%), yields 10yr 4.44-4.46%/30yr 5.03% amid hot CPI 3.8%/oil shocks shrug; Powell out/Warsh hawkish/Trump pressure no cuts til 2027; Japan/China dumps/TBAC/$9-15T 2026 rollover; Sep30 shutdown/Oct brinkmanship/Bessent warnings.