Castle Securities: The surge in U.S. Treasury yields reflects the policy risks of the Federal Reserve, making the results of the next interest rate meeting difficult to predict.

Castle Securities stated that, in the case of prolonged inflation above target levels, the Federal Reserve remains unwilling to tighten monetary policy further, which keeps long-term bond yields at multi-year highs and poses risks to the broader market. Nohshad Shah, head of fixed income sales for Europe, the Middle East, and Africa at Castle Securities, wrote in a client report that despite policy rates being 175 basis points lower than their peak, long-term U.S. Treasury yields remain at their highest levels in nearly 20 years. Shah remarked, This reflects the market's belief that both the Federal Reserve and fiscal authorities tend to choose the easier path when faced with difficult decisions. As long as this situation persists, it will continue to pose risks to the broader market. The yield on the 30-year U.S. Treasury bond surged to a near 19-year high of over 5.28% on Monday. Shah warned that the recent improvement in inflation and a softening labor market should not be seen as a signal that interest rate risks have subsided. He stated that the outcome of the Federal Reserve's rate meeting next month will be very difficult to predict.