2026.07.0114:14:15UTC+0010-Year Yields Trim Rebound

The yield on the 10-year US Treasury note eased to 4.47% after briefly testing 4.5% earlier in the session, following comments from Fed Chairman Warsh that inflation risks in the US were moderating. His remarks were consistent with softer price components in the ISM PMI and with wholesale energy prices returning to levels seen before the outbreak of war in the Middle East. Even so, the 10-year yield remained about 10 basis points above Monday’s seven-week low.

The ADP report showed an increase of 98,000 private-sector jobs, giving the Fed additional scope to tighten monetary policy in its effort to curb elevated inflation. While crude oil prices pulled back, refined fuel costs stayed sharply higher, reinforcing expectations of at least one Fed rate hike this year. Rate markets continued to imply a loose consensus for a single increase by December, though some participants have priced in multiple hikes.

Meanwhile, Warsh reiterated his view that the Fed’s balance sheet remains excessively large and is impairing the effectiveness of policy transmission via interest rates, potentially foreshadowing future sales of Treasury notes and bonds.