Federal Reserve's Kashkari: The U.S. bond market is still functioning normally, and rising yields do not affect discussions on monetary policy.

Minneapolis Federal Reserve President Neel Kashkari downplayed concerns about rising U.S. Treasury yields, stating that the market is functioning well and that the recent surge in yields is unlikely to impact discussions on monetary policy. Kashkari mentioned on a program last Sunday, All current indicators suggest that the U.S. Treasury market is operating normally, trading is taking place, and market liquidity is ample. Therefore, we can continue to use the federal funds rate as our main policy tool to drive down inflation. Last Wednesday, the U.S. Treasury unexpectedly announced that it would intensify its repurchase efforts for long-term Treasuries. The Treasury stated it would at least double the size of its liquidity support repurchase operations for bonds with maturities ranging from 10 to 30 years. Following the announcement, yields on Treasuries across all maturities fell, but they subsequently retraced the gains made after the Treasurys announcement, indicating investors believe the Treasury's measures may only have a short-term effect on curbing borrowing costs. Last week, the benchmark 10-year Treasury yield ultimately settled around 4.73%, while the 30-year yield remained close to its highest level since 2007. As Treasury yields remain high, Kashkari indicated that although current U.S. Treasury yields are elevated compared to recent historical levels, they were significantly higher in the 1990s. Moreover, Federal Reserve officials will meet again in September. At the July meeting, the Fed decided to keep interest rates unchanged for the fifth consecutive time. Kashkari was among three dissenting officials who supported a 25 basis point rate hike due to concerns about persistent inflation. Kashkari reiterated those concerns but did not explicitly state that he would support another rate increase in September. He said, We need to see more data, but I dont want to prejudge the next meeting. However, I currently do not have confidence that inflation will return to the target level in the short term. This week, investors will closely watch Federal Reserve Chairman Jerome Powell. Powell is scheduled to deliver his first keynote address at the Jackson Hole Global Central Bank Symposium since taking office at 10 PM Beijing Time on August 28. Against the backdrop of persistently high 30-year U.S. Treasury yields, intertwined inflation, and employment data, the market will focus on Powell's latest remarks regarding long-term Treasury yields, the anti-inflation roadmap, and future interest rate paths.