Federal Reserve Chair Warsh's Hawkish Remarks Boost September Rate Hike Bets and Treasury Yields

Federal Reserve Chair Kevin Warsh's recent remarks at the Jackson Hole symposium, stating the U.S. central bank 'will have work to do' if inflation does not clearly head towards 2%, have been interpreted as hawkish. This has significantly increased market expectations for a September rate hike, with the implied probability rising to 57%. Consequently, yields on interest-rate-sensitive two-year U.S. Treasury notes climbed to a more than one-month high of 4.33% (or 4.36%).