Walsh's decision to keep interest rates unchanged triggers a sell-off in US Treasury bonds, and market tightening may result in a rate hike of over 25 basis points BlockBeats News: On August 3rd, Federal Reserve Chairman Kevin Walsh decided last week to keep interest rates unchanged, but the bond market experienced severe volatility. A senior bond fund manager believes that the Federal Reserve's "staying put" has instead produced a stronger financial tightening effect through market reactions than actual interest rate hikes. Eric Hickman, founder of Lantern Capital, said that as of the closing of last Friday, the market value of treasury bond bonds, bills and treasury bonds of different maturities in the United States had shrunk by about $115 billion accumulatively after the Federal Reserve's interest rate resolution and the Walsh Conference. Hickman calculated that if the Federal Reserve chooses to raise interest rates by 25 basis points this week and assumes a synchronous increase of 25 basis points in bond yields within 5 years, the bond market would lose approximately $65 billion in extreme cases, which is lower than the actual losses caused by this volatility. He believes that Walsh achieved a stronger tightening effect by not directly raising policy rates, but rather allowing the market to reprice, while avoiding committing to maintaining higher interest rates in the long term. Data shows that the yield of 30-year US treasury bond bonds rose to 5.229% last Friday, hitting a 19 year high; The yield on 10-year US Treasury bonds has risen to 4.688%, the highest level since January 2025. Hickman said that it is still uncertain whether Walsh deliberately used market reactions to tighten policies, but Walsh had previously advocated reducing forward guidance and allowing the market to digest economic information on its own. This concept is evident in this policy operation. However, there are differences within the Federal Reserve regarding this matter. St. Louis Fed President Musalem stated that the responsibility for monetary policy belongs to the FOMC, not the financial markets, implying concerns about relying on market adjustments to achieve policy effects. [Original link]