AlphaWire

newswire

Bank of America Warns Treasury Selloff Could Return if Fed Can't Explain Inflation Plan

2026-08-04·newswire-us-stock-093002
Bank of America Warns Treasury Selloff Could Return if Fed Can't Explain Inflation Plan.

Bank of America strategist Mark Cabana said the selloff in U.S. Treasuries could resume if the Federal Reserve cannot better explain how it plans to achieve its 2% inflation target. Cabana, head of U.S.

rates strategy at Bank of America Global Research, said the selloff in long-term debt that pushed yields to nearly 20-year highs last Wednesday was a “textbook inflation-credibility shock.” At a news conference that day, Fed Chair Kevin Warsh failed to explain to investors how the central bank would curb price increases.

“It’s great to have a firm determination to achieve 2% inflation, but unless you tell us how you’re going to do it, we’re not going to believe you,” Cabana said in an interview. “And you can’t fool bonds either. They’ll see through you.” Cabana said the Federal Reserve now faces a credibility problem.

Economists at Bank of America Global Research wrote in a report on Monday that, following last week’s news conference and the bond market’s reaction, “the Fed must regain its voice through rate hikes to pass the September test.” “We want to see a plan, but there isn’t one yet,” Cabana said. “The long end of the yield curve makes that clear.”

#Stocks #Fed #Bonds

Full text

Bank of America Warns Treasury Selloff Could Return if Fed Can't Explain Inflation Plan

Bank of America strategist Mark Cabana said the selloff in U.S. Treasuries could resume if the Federal Reserve cannot better explain how it plans to achieve its 2% inflation target. Cabana, head of U.S. rates strategy at Bank of America Global Research, said the selloff in long-term debt that pushed yields to nearly 20-year highs last Wednesday was a “textbook inflation-credibility shock.” At a news conference that day, Fed Chair Kevin Warsh failed to explain to investors how the central bank would curb price increases. “It’s great to have a firm determination to achieve 2% inflation, but unless you tell us how you’re going to do it, we’re not going to believe you,” Cabana said in an interview. “And you can’t fool bonds either. They’ll see through you.” Cabana said the Federal Reserve now faces a credibility problem. Economists at Bank of America Global Research wrote in a report on Monday that, following last week’s news conference and the bond market’s reaction, “the Fed must regain its voice through rate hikes to pass the September test.” “We want to see a plan, but there isn’t one yet,” Cabana said. “The long end of the yield curve makes that clear.”

Bank of America strategist Mark Cabana said the selloff in U.S. Treasuries could resume if the Federal Reserve cannot better explain how it plans to achieve its 2% inflation target.

Cabana, head of U.S. rates strategy at Bank of America Global Research, said the selloff in long-term debt that pushed yields to nearly 20-year highs last Wednesday was a “textbook inflation-credibility shock.” At a news conference that day, Fed Chair Kevin Warsh failed to explain to investors how the central bank would curb price increases.

“It’s great to have a firm determination to achieve 2% inflation, but unless you tell us how you’re going to do it, we’re not going to believe you,” Cabana said in an interview. “And you can’t fool bonds either. They’ll see through you.”

Cabana said the Federal Reserve now faces a credibility problem.

Economists at Bank of America Global Research wrote in a report on Monday that, following last week’s news conference and the bond market’s reaction, “the Fed must regain its voice through rate hikes to pass the September test.”

“We want to see a plan, but there isn’t one yet,” Cabana said. “The long end of the yield curve makes that clear.”

← Back to archive