Despite the Federal Reserve's decision to hold rates at the June meeting, almost all participants saw the need for further increases, and some would have preferred a 0.25% hike. At the press conference after the meeting, Fed Chairman Jerome Powell expressed hope for a soft landing for the economy, but the minutes show that Fed staff is still forecasting a recession later this year and that the soft landing scenario is now less likely. Officials noted that the decline in inflation was slower than expected and that labor markets remain strong. The FOMC minutes, indicating more aggression than previously expected by investors, strong labor markets, and fears of slowly declining inflation (with risks of taking hold), sent bond yields soaring this week. The 10-year Treasury yield topped 4% and hit a new record high in 2023, surpassing the highs recorded just before the banking crisis erupted in March.
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