U.S. Treasury Yields Show Sharp Volatility as Fed Chair Walsh Faces Early Test Today

According to Societe Generale Americas research director Subadra Rajappa, U.S. Treasury yields showed sharp abnormal volatility today (May 15), driven by accelerating inflation expectations and surging energy prices tied to the Iran conflict. Rajappa stated that higher energy costs are limiting Fed Chair Kevin Walsh's room to cut rates—a policy direction he previously supported and that President Trump has requested. "The bond yields look somewhat out of control and we should take the signals from the bond market seriously," she told Bloomberg Television.

Market expectations have shifted sharply. Bloomberg data shows traders now estimate a nearly two-thirds probability of a Fed rate hike before December, a stark reversal from February 27, when markets widely expected more than two rate cuts this year.