Investors Speculate on Fed's Pause as Yields Rise, But Inflation Data Looms

Investors are speculating that the Federal Reserve may be done raising interest rates, as recent market moves have helped cool economic growth. The rise in interest rates on U.S. government debt, particularly the yield on the 10-year Treasury bond, has caught attention as it influences borrowing costs for mortgages, corporate debt, and stock market valuations. Fed officials have acknowledged that higher market rates can reduce spending and depress stock prices, and they are taking financial market developments into account when assessing the economic outlook. Investors have lowered expectations of another rate increase this year, but market dynamics could reverse and keep borrowing costs high. The Fed has raised rates to tame inflation, but the impact on longer-term borrowing costs takes time.