The 1-year Treasury yield climbed 6 basis points to 4.12%—its highest since June 2025—after Fed Governor Christopher Waller said the FOMC may need to tighten in the near term if this week’s CPI and PPI data come in hot.
Waller argued inflation is at a crossroads, with headline PCE at 4.1% in May, core PCE at 3.4% and core services at 3.7%, while the labor market is near full employment and no longer the Fed’s main concern.
The 1-year yield now sits 50 basis points above the effective federal funds rate, signaling markets are starting to price in the opening of a new rate-hike cycle rather than cuts later this year.
Longer maturities moved too, with the 10-year yield up 6 basis points to 4.62%, as investors focused on persistent goods-price pressure and Waller’s warning against repeating the Fed’s 2021 delay in confronting inflation.