US Treasuries and the Fed: Yields, Auctions, FOMC — 2026-09-06

Top developments

Waller’s Dovish Pivot Temporarily Calms Bond Market

On Thursday, September 3, Treasury yields fell across the curve after Federal Reserve Governor Christopher Waller indicated he would support keeping interest rates unchanged at the upcoming meeting. This dovish signal from a key Fed official helped reverse some of the selling pressure seen earlier in the week, as investors had been bracing for potential hawkish commentary from Chair Kevin Warsh. The relief rally pushed the S&P 500 to back-to-back gains as traders priced in a lower probability of a September hike.

Hot Jobs Report Reverses Gains, Lifts Hike Odds

The optimism from Waller’s comments was short-lived. On Friday, September 4, the August jobs report showed a gain of 162,000 payrolls and revised July’s data from negative to positive, beating expectations. This "hot" report immediately increased market expectations that the Federal Reserve could raise rates at its next meeting. Consequently, major indexes fell, and Treasury yields jumped, with the 2-year yield—which is highly sensitive to policy expectations—rising sharply.

10-Year Yield Hits Multiyear Highs Amid Inflation Concerns

Earlier in the week, on September 2, the 10-year Treasury yield reached its highest level since November 2023, pressured by persistent inflation concerns and rising debt worries. Although yields pulled back slightly later in the week due to Waller’s comments and a Treasury announcement regarding debt repurchases, the broader trend remains upward. The 10-year yield hovered around 4.77% mid-week before the jobs report impact, signaling significant stress in the long-end of the curve.

Market Split on September FOMC Outcome

Following the mixed signals of the week—dovish Fed comments followed by strong economic data—the futures markets have become deeply divided. As of September 4, odds for a rate hike versus a hold in September are approximately 50-50. This uncertainty is reflected in the volatility of the 2s10s curve and the heightened sensitivity to every new data point. Investors are now closely watching upcoming inflation indicators to break this deadlock before the September 15-16 FOMC meeting.

Local view

German media outlets highlighted the global ripple effects of US yield volatility. n-tv reported that the German DAX index closed the week slightly lower (down 0.2%) as investors remained cautious about US monetary policy uncertainty following the strong job data. Finanzen100 focused on the credibility crisis facing central banks, asking if the US faces a debt crisis given yields at multi-year highs and a Fed Chair under pressure. Meanwhile, Japanese outlet Nikkei noted that the September FOMC is "live," with importance increasing due to the need for inflation data to guide the decision, reflecting the global nature of this uncertainty.

Context & numbers

• 10-Year Yield: Reached a high since Nov 2023 on Sept 2; traded around 4.77% mid-week before reacting to jobs data.
• 2-Year Yield: Jumped more than 6 basis points on Aug 27/28 period reactions to Warsh, and spiked again on Sept 4 after the jobs report.
• Jobs Data: August payrolls +162,000; July revised to positive.
• Fed Funds Rate: Held steady at 3.50%–3.75% as of the July 29 FOMC statement.
• Dot Plot Context: June projections showed 9 members projecting at least one hike in 2026, while 8 projected unchanged rates.

On the radar

• September FOMC Meeting: Scheduled for September 15-16, 2026. The statement will be released at 2:00 PM EDT on Sept 16, followed by Chair Warsh's press conference.
• Treasury Buybacks: The Treasury Department announced an upscaled buyback operation of long-term debt in late August/early September, which provided temporary relief to yields but did not alter the broader trend.
• Upcoming Inflation Data: With the market split 50-50 on a hike, any upcoming CPI or PCE data will be critical in determining the Fed's final decision.