Treasury Secretary Scott Bessent's attempts to suppress interest rates through bond purchases have failed to lower yields, which have instead surged to near 5% on 10-year Treasury bonds. Rising rates stem from inflation concerns tied to the Iran conflict, AI infrastructure spending, and tariff policies, threatening potential recession risks for an already debt-burdened economy.
Federal Reserve Chair Kevin Warsh faces pressure to raise interest rates after back-to-back inflation readings exceeded expectations, with core CPI rising 0.3% in August against forecasts of 0.2%. Market pricing now shows an 85% probability of a rate hike at the Fed's September 15-16 meeting, driven by persistent inflation above the 2% target for over five years and energy price spikes from Middle East tensions.