Expectations for lower U.S. interest rates are weakening as Treasury yields climb to their highest levels in more than a year and Federal Reserve Chair Kevin Warsh signals that inflation may require tighter policy instead.
CNBC host Jim Cramer added to the increasingly hawkish narrative Tuesday, saying he does not see how interest rates can move lower under the current combination of Fed policy, geopolitical tension and rising energy prices.
His warning came as the benchmark 10-year U.S. Treasury yield climbed to roughly 4.79%, its highest level since January 2025, during a broad selloff in government bonds.
10-Year Treasury Yield Breaks Higher
The move marks a sharp reversal from the rate-cut narrative that dominated markets earlier in the year.
Long-term Treasury yields reflect more than expectations for the Federal Reserve’s next meeting. They also incorporate future short-term rates, inflation expectations and the term premium investors demand for holding longer-dated debt.
Coinpaper’s guide to the Treasury term premium explains why longer yields can rise even when investors expect eventual monetary easing.
Several forces are pushing yields higher at the same time. Brent crude has risen above $90 as renewed U.S.-Iran tensions threaten energy flows through the Strait of Hormuz, increasing inflation risks just as the Fed is debating whether monetary policy is restrictive enough.
Markets are now assigning a significant probability to another Fed rate increase in September rather than a cut.
Warsh Pushes Markets Toward Rate-Hike Risk
Kevin Warsh has chaired the Federal Reserve since May 2026, and his recent remarks have shifted expectations toward a more hawkish policy path.
At Jackson Hole on Aug. 28, Warsh argued that inflation remains too high and signaled that additional tightening may be necessary if price pressures fail to move convincingly toward the Fed’s 2% target.
That represents a notable change from earlier expectations that the Fed’s next major move would eventually be lower rates.
Coinpaper recently covered how Treasury yields were already rising after Warsh’s remarks and how officials have discussed additional rate hikes if inflation remains persistent.
Cramer’s comments fit that broader shift. His argument is that with oil prices rising, inflation risks elevated and the Fed sounding more restrictive, the conditions needed for rate cuts are becoming harder to justify.
Higher Yields Raise Pressure on Stocks and Crypto
The move in Treasury yields matters well beyond the bond market.
Higher risk-free yields make stocks less attractive on a relative basis and increase the discount rate applied to future earnings. Long-duration growth stocks, particularly technology companies with large AI spending programs, can be especially sensitive.
Crypto also tends to face pressure when rate expectations turn hawkish because higher yields increase the appeal of cash and government bonds relative to non-yielding assets.
Coinpaper has previously tracked how higher Fed rate expectations pressured Bitcoin during earlier Treasury selloffs.
Wall Street is not unanimous about what comes next. Some strategists see a September hike becoming increasingly plausible, while others argue Warsh’s rhetoric does not guarantee immediate action.
For now, however, the bond market is sending a clear signal.
With the 10-year Treasury yield near 4.8%, oil above $90 and Fed expectations shifting toward tighter policy, Cramer’s argument that rate cuts have become difficult to justify is increasingly consistent with how financial markets themselves are pricing the outlook.
