What Bond Markets Are Saying About the Fed: Yield Curve, Inflation Signals, and a Playbook for Investors
U.S. bond markets have pivoted in the wake of Chair Jerome Powell’s Jackson Hole remarks, with the Treasury curve re-steepening as front-end yields drift lower and long-end term premium re-emerges. As of August 22, 2025, the 10-year Treasury yield is 4.26% and the 2-year is 3.68% (U.S. Treasury), putting the 10s–2s spread near +58 basis points, per FRED’s T10Y2Y. Market-implied inflation remains anchored: the 5-year breakeven is 2.48% and the 10-year is 2.41%, while the 10-year TIPS real yield is about 1.94% (FRED). The effective federal funds rate stands at 4.33% for July (FRED), still restrictive by historical standards. Equities have responded with improving breadth and lower volatility, and long-duration bond proxies have stabilized as real yields level off (Yahoo Finance).