The US 10-year yield rose to 4.23% on Friday, its highest level in over four months, as investors reacted to renewed political noise around the Federal Reserve and a reassessment of policy expectations. Reports of a criminal probe involving Chair Jerome Powell and a sharp shift in prediction markets toward Kevin Warsh as a potential successor unsettled confidence in the Fed’s independence, prompting investors to demand higher compensation for long-duration debt. The move was reinforced by resilient US data, with stronger industrial production and steady retail spending supporting the view that growth remains firm enough to sustain a higher-for-longer rate environment. Attention now turns to next week’s PCE inflation and GDP releases for clearer guidance on disinflation and the Fed’s reaction function, with the absence of softer readings likely to keep long-end yields higher. US bond markets will be closed on Monday for Martin Luther King Jr Day.
