[Federal Reserve Officials Downplay U.S. Treasury Sell-Off Risks, but September Policy Divergences Persist] BlockBeats News, August 21: Recently, U.S. Treasury bonds have experienced a sharp sell-off, with long-term yields briefly rising to their highest levels since 2007. However, Federal Reserve officials have downplayed market concerns over so-called 'policy credibility damage.' San Francisco Fed President Mary Daly and St. Louis Fed President James Bullard both believe that the rise in long-term Treasury yields is more attributable to government financing needs and funding demands driven by AI infrastructure development, rather than runaway inflation expectations. That said, the two hold markedly different views on monetary policy for September. Daly argues that recent inflation, retail sales, and employment data have alleviated the need for further tightening, stating that current policy is in a 'good place,' with insufficient preemptive justification for either raising or lowering rates. Bullard, on the other hand, takes a more hawkish stance, asserting that core inflation remains at a relatively high level of 2.5% to 3%. He suggests that current policy may already be close to neutral or even slightly accommodative, revealing that he leaned toward a rate hike during the July meeting. Market expectations for a rate hike in September have significantly cooled, with the probability dropping from over 70% at the end of July to around 30%. Notably, neither Daly nor Bullard has voting rights on the FOMC this year, and three officials opposed holding rates steady during the July meeting, indicating that internal policy disagreements within the Fed remain unresolved. [Original Link]