Treasury Yields Keep Climbing After the Fed. So What's the Market Seeing?

The bond market isn't slowing down.

Treasury yields moved even higher on Thursday after the Federal Reserve decided to leave interest rates unchanged, as investors started pricing in the possibility that rates could stay higher for longer.

The 10-year Treasury yield climbed to around 4.70%, while the 30-year yield pushed above 5.23%, its highest level since 2007. Even the 2-year yield, which closely tracks Fed expectations, rose to about 4.29%.

When yields go up, bond prices go down, so the recent bond sell-off is still very much alive.

The Fed kept its benchmark rate between 3.5% and 3.75%, but the decision wasn't unanimous. It passed in a 9-3 vote, showing that policymakers aren't all on the same page about where rates should go next.

In its statement, the Fed said the economy is still growing at a solid pace, the labor market remains strong, and unemployment is staying relatively steady.

What it didn't do was hint that rate cuts are coming anytime soon.

That's why the market is still on edge.

Some economists, including those at Deutsche Bank, think the Fed isn't finished yet. They're expecting two more 25-basis-point rate hikes before the end of the year, one in September and another in December.

At the same time, rising long-term yields are starting to create new concerns.

Higher borrowing costs could put more pressure on areas like housing and business investment, while investors continue debating how quickly inflation will actually cool.

For now, one thing is pretty clear: the bond market isn't convinced the Fed is done fighting inflation.

Do you think the Fed has another rate hike left this year, or is the bond market overreacting?