• Ten-year yield edges up 5.91 bps to 4.481% after paring intraday gains.
  • Fed Chair Warsh's remarks at Sintra panel fuel uncertainty over balance-sheet policy.
  • Market remains sensitive to Fed leadership signals, with curve steepening risks.

U.S. Treasury yields pared gains late Thursday after hitting session highs during Fed Chair Kevin Warsh's panel appearance at the European Central Bank's Sintra forum. The yield on the benchmark 10-year note was last up 5.91 basis points at 4.481%, having risen as much as 8 bps earlier in the day, according to people familiar with market activity.

Warsh, speaking alongside other central bank heads, offered no fresh policy cues but reiterated the Fed's data-dependent stance. His comments left traders parsing nuances around the pace of balance-sheet reduction, a key driver of recent long-end volatility. "The market is in a regime of acute sensitivity to any Fed chair commentary, especially around the runoff," a New York-based rates strategist said. Efforts to reach the Fed for further clarification were unsuccessful.

The move trimmed gains partly as participants adjusted positions ahead of month-end rebalancing. The 10-year yield had risen sharply this week on persistent inflation expectations and firm oil prices, approaching the 5% threshold before retreating. Some analysts now warn that without clearer guidance on balance-sheet normalization, the yield curve could steepen further as additional Treasury supply weighs on long-term debt.

"If the Fed cuts its reinvestments more aggressively, we could see a steepening bias," remarked a portfolio manager at a major asset manager (WFC). "Short-end rates are pinned by policy, but the long end is vulnerable to supply and liquidity concerns." The yield on the two-year note, more sensitive to monetary policy, added 3.2 bps to 4.78%.

Global investors are closely watching the U.S. policy path, as higher yields ripple into borrowing costs for households and corporations. Markets now price in a roughly 60% chance of a rate cut at the July meeting, though Warsh's comments did little to solidify expectations. Upcoming inflation data and further Fed speeches are likely to drive near-term moves.

Correction: An earlier version of this article misstated the peak yield level. The intraday high was 4.497%, not 4.501%.