Neel Kashkari downplays concerns over rising US Treasury yields

Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, has characterized the current bond market as “orderly” and “functioning” despite rising long-term borrowing costs. As the 10-year Treasury yield nears 4.7% and the 30-year yield exceeds 5%, Kashkari noted that these levels are not unprecedented compared to historical data from the 1990s and early 2000s.

Kashkari attributed the upward movement in yields to several factors outside the direct control of the Federal Reserve, including increased government borrowing due to the federal deficit and significant capital expenditures related to artificial intelligence and data center construction. He emphasized that the central bank's primary role is to anchor inflation expectations rather than micromanaging the long end of the yield curve.

While Treasury Secretary Scott Bessent has initiated debt buyback operations to ease pressure on long-dated bonds, Kashkari maintained that the Treasury Department is responsible for managing the debt market, whereas the Fed focuses on inflation and economic data. Kashkari remains a hawkish voice within the FOMC, advocating for a gradual, data-dependent approach to interest rate policy.