Market Call: "No, Mr. Bond, I Expect You To Die!"

Does the Fed really want to see the yield curve "disinvert" with the 10-year Treasury bond yield (currently 4.26%) rising up to the 2-year Treasury note yield (currently 4.92%) (chart)? We will find out on Friday, when Fed Chair Jerome Powell speaks at the Fed's annual Jackson Hole conference.

If Powell wants to calm the bond market down, he should acknowledge that inflation has moderated significantly and say that if it continues to do so, the Fed will probably lower interest rates next year. That would be consistent with the FOMC's June Summary of Economic Projections showing the federal funds rate at 5.6% this year, 4.6% in 2024, and 3.4% in 2025.