Federal Reserve Bank of Minneapolis President Neel Kashkari said Sunday that rising US Treasury yields do not concern him and are unlikely to affect the Federal Reserve's policy deliberations. In an appearance on CBS's "Face the Nation," he played down concerns over the recent rise in Treasury yields and described the market as healthy even as yields climb.

Bond market 'functioning as it should'

Kashkari said there is every indication the Treasury market is functioning as it should: trades are taking place, liquidity is sufficient, and the market is working properly. That assessment lets the Federal Reserve keep its focus on the federal funds rate as its main inflation tool — the primary lever for bringing inflation back to target — rather than on conditions in the bond market itself.

That kind of reassurance carries weight because the Fed has historically stepped in when the Treasury market seized up — most notably in March 2020, at the onset of the pandemic, when it launched emergency Treasury purchases to restore trading conditions. Long-term Treasury yields also anchor borrowing costs across the economy, from mortgages to corporate debt, so a functioning market matters well beyond trading desks.

Yields high, but not historically extreme

His comments came as yields across the curve climbed last week. The benchmark 10-year Treasury yield ended last week near 4.73%, while the 30-year stayed close to its highest level since 2007. Kashkari acknowledged that, although yields are elevated relative to recent history, they were significantly higher in the 1990s — a comparison that frames the current level as high but not historically extreme. In that decade, the 10-year yield spent much of the period trading above 6%.

A fifth straight hold, and a July dissent

The remarks arrive ahead of the Fed's next policy meeting in September. At its previous gathering, the Federal Reserve held interest rates steady in July for a fifth consecutive meeting, and Kashkari was one of three officials to dissent in favor of a quarter percentage point rate increase, citing concerns over persistent inflation.

September remains a live decision

Speaking Sunday, Kashkari repeated those inflation concerns but stopped short of committing to push for a rate hike at the September meeting, or to another dissent. More data is needed before the next meeting, he said, and he does not want to prejudge the outcome. He added that he is not currently confident inflation is heading back to target within a short period — keeping the door open to further inflation worries heading into September. Price stability sits alongside maximum employment in the Fed's statutory dual mandate — the balance officials weigh in every rate decision.

Jackson Hole spotlight shifts to Warsh

Markets this week are also turning their attention to new Fed Chair Kevin Warsh, who is scheduled to deliver keynote remarks on Friday at the central bank's annual symposium in Jackson Hole, Wyoming. The retreat, hosted by the Kansas City Fed, has a history of consequential keynotes: Ben Bernanke used his 2010 remarks to lay the groundwork for a second round of quantitative easing, and Jerome Powell unveiled the average-inflation-targeting framework there in 2020. Warsh, who served as a Fed governor from 2006 to 2011, now takes that platform as chair. His comments are likely to carry more weight for the policy outlook than the Sunday remarks of any single regional Fed president, and markets are likely to treat the new chair's Jackson Hole speech as the more consequential policy signal.

The market read

For rates traders, Kashkari's comments push back against any narrative that surging long-end yields reflect market dysfunction, which should ease some of the term premium anxiety — the extra compensation investors demand for holding longer-dated bonds instead of rolling short-term debt — that has crept into rates trading in recent sessions. With the 10-year sitting near 4.73% and the 30-year close to its highest level since 2007, the message that liquidity remains intact is likely to matter more to fixed income desks than the yield level itself.

His continued inflation concerns, without a firm commitment to push for a September hike, leave the meeting outcome genuinely live rather than pre-signalled, keeping rate-sensitive assets exposed to incoming data prints between now and then. Taken together, the two data points set up September's meeting as a genuine decision point rather than a formality, with the yield backdrop and the inflation trajectory both still very much in play.

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