Short-term U.S. borrowing costs rose after Federal Reserve Chair Kevin Warsh told investors the central bank may still "have work to do." A Treasury yield is the annual return the government pays to whoever lends it money by buying its bonds. The two-year version is the number traders watch most closely for clues about where the Fed's own interest rate is heading. Warsh made the remarks during his keynote speech at Jackson Hole, an annual summit of central bankers and economists that global investors had been watching closely.
"Have work to do" carries a specific meaning in central bank language. It tells markets that officials are not yet satisfied, and that further interest rate increases remain possible. But Warsh paired the phrase with "may." That qualifier matters. What this actually says is that more action is on the table, not that it is decided.
The Jackson Hole keynote had been described as highly anticipated before Warsh spoke. The jump in the two-year yield is what investor assessment looked like once he did.