Federal Reserve Chair Kevin Warsh used his Jackson Hole keynote to declare that inflation remains too high and that the central bank still has work to do, sending bond yields climbing and resetting market expectations for monetary policy.
The 10-year Treasury yield finished near 4.73%, up about five basis points from the prior session, while shorter-term yields rose even faster as traders raised the probability of a September rate hike to roughly 55% to 62%. The shift erased the soft-inflation optimism that had lifted equities earlier in the week and put renewed pressure on rate-sensitive parts of the economy.
Mortgage rates, which track long-term Treasury yields, moved higher as a result. The 30-year fixed-rate mortgage hovered around 6.66% to 6.81% in late August, keeping housing affordable only for a narrow slice of buyers and leaving existing homeowners locked into lower rates. Real estate brokers say the market remains stuck in a holding pattern, with neither buyers nor sellers willing to move until rates break decisively lower.
Small businesses also feel the squeeze, since higher benchmark yields raise borrowing costs on lines of credit, equipment loans, and commercial real estate. With energy costs already elevated by Middle East tensions, the combination leaves smaller operators with less cushion against unexpected shocks.
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