The 10-year U.S. Treasury yield is around 4.80%, near its 2025 high, as fiscal deficits, inflation pressure and demand for AI infrastructure financing weigh on the bond market. Investors are increasingly focused on Federal Reserve Chair Kevin Warsh’s policy reaction function—how the central bank will balance inflation and growth risks and what developments would trigger a policy change—rather than expecting a return to quantitative easing. Warsh said at Jackson Hole that more work remained to combat inflation, which markets interpreted as leaving room for further rate increases. Markets now price roughly a 60% chance of a Federal Reserve hike next week, which would be the first increase in more than three years. The week also includes closely watched CPI and PPI reports, continued concern over higher oil prices and a busy period of Treasury issuance beginning with a three-year auction.