Mortgage rates climbed to their highest level since Jan. 13, 2025 after Fed Chair Warsh's 2:30 p.m. press conference, not the Fed's widely expected rate hike announced 30 minutes earlier.
10-year Treasury yields barely reacted at 2 p.m. because the hike was already priced in, then sold off as Warsh said the economy remained strong, inflation had shown little recent progress and the Fed must "remove some accommodation."
That language led traders to price in additional near-term tightening rather than a one-off move, pushing mortgage-linked bond yields higher even though tougher inflation policy could help lower rates over time.
The path from here still depends on how quickly inflation responds and on outside risks including the Iran war, which could keep rate volatility elevated.