Treasury yields climb as Wall Street flags Fed 'inflation credibility shock'

Published Jul 30, 12:24 PM UTC

On July 30, 2026, long-dated US Treasury yields remained elevated after the Federal Reserve held interest rates steady, with the 10-year yield reaching 4.66% and the 30-year yield hitting 5.21%, its highest since 2007. Wall Street analysts, particularly from Bank of America, described the market reaction as a 'central bank inflation credibility shock,' arguing that the Fed is falling behind on inflation. BofA economists predicted the Fed will hike rates by 25 basis points at each of its remaining three meetings in 2026. Polymarket bettors raised the probability of a September rate hike to 56% after Fed Chairman Kevin Warsh's press conference. Warsh refrained from providing forward guidance and hinted at possible changes to the Fed's inflation targeting framework, which analysts interpreted as dovish. The article notes that while Warsh suggested markets are tightening conditions for the Fed, analysts believe the central bank must eventually act to maintain credibility.